Fantasy Island: The Strange Tale of Alleged Fraudster Pearlasia Gamboa

An injunction was issued barring Gamboa from representing herself as a banker anywhere in the state. That put a stop to banking schemes involving the Dominion in California, Sayre-Peterson says, though it prompted an unusual form of retaliation. Gamboa used her position as president of Melchizedek to declare "spiritual warfare" on California's government. "I will do metaphysical battle with you in your dream state," Gamboa wrote to former California Deputy Attorney General David Green, according to a 1995 account of the episode in the Sacramento Bee. "And if you interpret your dreams correctly you will know that I am the victor."

What, exactly, had state bank regulators stumbled upon? Melchizedek, according to fraud experts who have studied it, was originally the brainchild of David and Mark Pedley, father-and-son con artists who operated for years in California, Mexico, Canada, and elsewhere. The pair perpetrated various acts of fraud in mystical symbiosis, sporting matching Nazarene-style beards and long, flowing hair. They created their own version of the Bible, a cribbing of the King James translation embroidered with idiosyncratic metaphysics. (In the so-called Melchizedekian Bible, the Holy Ghost is referred to as "Scientific Being.") One of Korem's oft-used aliases, Branch Vinedresser, appears to be a form of filial homage inspired by a verse from John 15: "I am the vine, and my father is the vine-dresser."

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Gamboa’s husband, Tzemach Ben David Netzer Korem, is serving time in the federal pen for stock fraud.

Frank Gaglione

Eric Diesel says Gamboa stole $300,000 from him and threatened to cut off his hands.

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Alleged Con Artist Pearlasia Gamboa Explains Her Fake Island Nation (VIDEO)

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More About

• Elvira Gamboa
• Eric Diesel
• David Korem
• Criminal Sentencing and Punishment
• Crime and Law

In 1982, the Pedleys were indicted and convicted for a real estate swindle in Placerville. Mark Pedley was sentenced to three years in prison. His father — who had four previous fraud convictions — fled to Mexico following the indictment, and was imprisoned there on unrelated charges.

Rumors trickled back to the United States that the elder Pedley had died while incarcerated. But his body never turned up, leading many American law-enforcement officials to believe he had bribed his jailers to help fake his death. "We got a report that he had died in a Mexican prison, but there was nothing to support that," says Edwin Tomko, a former federal prosecutor who drew up the indictments against the Pedleys.

After he was released from prison, the younger Pedley began doing business under a new name: Tzemach Ben David Netzer Korem. In 1993, through associates in Canada, he met Elvira Gamboa, a Manila-born divorcée who had begun dabbling in gold-mining concerns. Gamboa says she immigrated to the U.S. in 1973, and worked as a blood analyst in Bay Area medical laboratories. Upon meeting Korem, she says, she was intensely drawn by the beauty of his spiritual state, and decided to give up material things for a life of religious cultivation. "I was tired of making money," she says.

But this couple was not destined for asceticism, and worldly ventures were soon in the works. Gamboa says they hatched the idea of securing a homeland for the faithful. "I can help you get an island, because in my country we have lots of islands," she recalls telling Korem, who had previously laid claim to the remote Colombian island of Malpelo. "As long as we're doing what is righteous."

Melchizedek claimed as its new territorial capital one of the Karitane Islands in the South Pacific. The island was uninhabited, and for good reason, since it is completely submersed for part of the day. "By high tide, you better get out of there," says Gamboa, who acknowledges she has never personally visited the land mass.

French testing of nuclear weapons on South Pacific atolls prompted another declaration of war by the Dominion in 1995. Rather than the spiritual challenge issued to California banking officials, the Dominion threatened the French with old-line Soviet nuclear weapons it claimed were hidden by Melchizedekian allies in the Carpathian Mountains. This brinksmanship was ignored. France, like almost every other sovereign nation, has never recognized Melchizedek's existence. (The Dominion did succeed in establishing diplomatic ties with a single country, the landlocked and impoverished Central African Republic.)

The Dominion eventually expanded beyond its underwater seat of government to claim more land: three more tiny Pacific islands and portions of Antarctica. After annexing its polar territory, the Dominion began listing among its senior officials a figure with the surname "Penguini," a touch that a veteran California fraud investigator describes as "cute."

What was the point of such a lovingly detailed fiction? The Dominion of Melchizedek, according to government authorities, was intended to act as a sort of mothership for con artists worldwide, issuing fake banking licenses, passports, and other documents to lend a veneer of official authenticity to fraud schemes. "Everything about it is phony," says John Shockey, former head of the fraud unit for the U.S. Comptroller of the Currency.

In 1995, a man calling himself Gerald-Dennis Sayn-Wittgenstein-Hohenstein, who claimed to be a prince of the Dominion, was thrown in jail by a judge in Hong Kong for trying to pass a bogus $319,000 check from a Melchizedek-chartered bank. Jeff Reynolds, Melchizedek's secretary of commerce, was sentenced to four and a half years in federal prison on charges related to insurance fraud in Texas in 1996.

As for the car-loan episode that first put the Dominion on California officials' radar, Gamboa insists it was a misunderstanding. At the time, she says, she and Korem were living in a cabin on a riverbank near Mount Shasta. The inspiration for "Bankasia" was simply a combination of this salient geographical feature — the "bank" from riverbank — with a reference to the continent on which she was born. She has a harder time explaining why "AG," a suffix that stands for Aktiengesellschaft and refers to German financial institutions owned by shareholders, was included in this new identity.