Ringleader pleads guilty in Discovery embezzlement case

Nov. 17--It was a matter of trust for friends and colleagues of Roland Edward Steed.

The former Discovery Insurance executive pleaded guilty Monday to four felony counts related to an elaborate insurance fraud scam perpetrated by him and four others over a period of at least seven years and involving around $5.3 million.

Co-conspirators alleged in statements the crimes, discovered in late 2011, possibly dated back to the mid-1990s.

Discovery Insurance owner and CEO Stephen Hill said during his testimony in Lenoir County Superior Court it's his belief, after reading the statements from the other defendants and looking back over Steed's 19 years with Discovery, that Steed joined the firm with the express intent of defrauding it.

Cassie Stallings, Discovery assistant vice president, said she put considerable faith in Steed and looked up to him as a father figure. She also found the check that led to the entire unraveling of the conspiracy.

Because of a Medicare reconciliation law that's part of the Affordable Care Act -- popularly known as Obamacare -- Stallings discovered a check made out to an individual, but cashed by Signal Claims Service.

Further investigation led to the revelation of co-conspirator Marvin Lyle Quinn as the person controlling the Signal account.

She testified she took the check to Steed, who professed he didn't know how the payment came about. When another, similar check popped up two months later, she began an investigation that showed suspicious activity with Steed as the sole person responsible at Discovery.

Stallings said she made multiple copies of the documents, talked it over with her husband, and a couple days later presented Hill with the findings.

Hill, who became a co-owner of the business with other family members in the early '90s, said they brought on Steed to build the auto claims side of the business virtually from the ground up. He set up their processes, helped select the software systems and had a hand in nearly everything to get it and keep it running.

That's not to say there weren't doubts along the way. Hill said he was suspicious when Steed took a private jet out of town, for instance, and wondered about Steed's gambling trips. But he said Steed shared news of big gambling payoffs with the rest of the office, and an investigation into whether he was stealing from the company didn't turn up much.

Hill said if it wasn't for his wealth generated by other businesses, Discovery would've gone out of business because of money it continued to lose as claims outstripped payments.

In a deal with prosecutors, Steed, 71, avoided the full set of charges against him. Those were 20 felony counts of conspiracy and seven felony counts each of obtaining property under false pretense, embezzlement, corporate malfeasance and larceny by employee.

"This is a case of American greed working in Kinston," Senior Resident Superior Court Judge Paul L. Jones said.

Jones added that if the business would've failed, it would've had a significant negative impact on the local economy, and regardless of the defendant's age and medical issues, "Prison is hard, but it is required."

Steed faces five years to six years and nine months in state prison and millions of dollars in restitution.

Quinn, 59, pleaded guilty to two felony counts each of obtaining property under false pretense and conspiracy April 29, 2013. Edward Earl Waters, 65, pleaded guilty to the same charges Nov. 12, 2012. Steed's brother, 68-year-old Franklin Ronald Steed, was also involved in the conspiracy, as was Russell Simeon Ward, who died Nov. 9, 2011.

Jones said Monday afternoon the case should be disposed and sentences given to unsentenced defendants today.

Wes Wolfe can be reached at 252-559-1075 and [email protected]. Follow him on Twitter @WesWolfeKFP.

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