A small compensation was given to him by the government at the instance of the Duke of Bedford, then lord lieutenant, and he appears to have begun grazing in England, probably in Yorkshire.
He had got possession of certain papers and charters purporting to have been granted by Charles I to Sir Edmund Plowden, and entitling him to colonise New Albion (i.e. New Jersey).
This attempt at colonisation proved abortive, and in Charles II's reign the charter was superseded by a new grant to James, Duke of York.
Armed with his papers (which were probably forgeries), Varlo went out to the American colonies (the independence of which had just been recognised by Britain), expecting apparently to be acknowledged as governor of the province of New Jersey and as lessee of one-third of the territory.
Varlo also took a twelve months' tour through the states of New England, Maryland, and Virginia (where he met George Washington).
The last trace of him is on 24 February 1795, when he was living in Southampton Row, New Road, Paddington, where Sir John Sinclair sent a formal letter of thanks for certain suggestions made by Varlo to the Board of Agriculture on premiums for the cultivation of maize.