In 2376, he was contacted by three people claiming to be Starfleet officers, a Captain Janeway, Commander Chakotay, and Lieutenant Tuvok. He wasn't aware that these were actually the thieves, Dala, Zar, and Mobar. After they gave him a tour of their ship, the Delta Flyer, they offered him membership into a scam Federation. They showed him the impressive weaponry the mother ship, USS Voyager, had and told him that the Federation was a family, and that they'd gladly help him fight his enemies. They claimed they had to leave for a six-month mission, so he paid an admission fee to join quickly.
However, he learned he had been scammed when he found that the photon torpedoes they sold him were just empty casings, and didn't affect his enemies, the Polonians who had also bought a Federation membership.
As reimbursement, he decided to take the false Delta Flyer for himself. However, at just that time the real USS Voyager dropped out of warp nearby. He threatened to fire on them, but before they could tell him he'd been misled, he fired at their tractor beam emitters. Voyager quickly disabled Varn's ship, and went after the impostor Delta Flyer. (VOY: "Live Fast and Prosper")