In 1983, Pedley was convicted of mail and interstate fraud relating to a land fraud in California and jailed for three years. Shortly after his release, he was again successfully prosecuted in 1986 for a $6 million currency fraud scheme that was operated in 1982–83; he was jailed for eight years and fined $25,000. Having been paroled in 1990, he set up the Dominion of Melchizedek. His parole was revoked in late 1991 due to a violation of his conditions, arising from his promotion of a fictitious country, and was returned to prison to serve the remainder of his sentence. In 1994, following his release, Pedley married Pearlasia Gamboa, who was made president of Melchizedek.