Velorak always had something up his sleeve, yet another plan to fall back on. Since he was working in the Leviathan projects, it stands to reason that Velorak knew about other top-secret projects. It's plausible that he knew about the early work on mind control and chip implants.
Here's what happened...
Velorak was betrayed by Aeryn Sun. He was surprised, even disappointed; but he had not forgotten to plan for this situation. If everything he worked on failed, if he was finally exposed, Velorak had one last, small chance.
Velorak waited in the small cell for his commanding officer, Bialar Crais, to seal his fate. He nervously fingered his Ident-chip (PK equivalent of a dog-tag), always kept with on a long metal chain around his neck. Crais entered the cell and addressed Velorak, but the tech did not respond. Velorak waited until he drew closer. Suddenly he lunged at Crais and sunk a sharp edge of his Ident-chip into the back of the other man's neck.
Velorak, of course, was quickly beaten and subdued by the guards. He was tortured and eventually died, silent in the hands of his torturers. Whatever his plans were, no one learned of them.
Bialar Crais received a few stitches and a clean bill of health at the infirmary. He went on with his life. Unknown to the doctors or Crais however...
Inside his Ident-chip Velorak had hidden a tiny injector. When he jabbed Crais, it injected a small mind-chip. It was similar in design to Scorpius's, carrying Velorak's personality and information. However, it was only a prototype: it did not have the power to take control of Crais's brain, or even do more than barely influence him. The chip could only watch and wait.
Then something big happened. John Chrichton made his flashy entrance in the UT, killing Crais's brother. The stress and pressure of chasing after John began to affect Crais. He became, shall we say, a little unhinged. This was the opportunity that the Velorak-chip had been waiting for. Ever so slowly, Velorak began to increase influence over Crais. One symptom of this take-over can be easily identified: his growing attraction to Velorak's old flame, Aeryn Sun.
By the events of Family Ties, Crais/Velorak had reached the point of no return. Slowly but surely, Velorak was taking over Crais's brain. The final breaking point came when Crais/Velorak bonded with Talyn. A bonding with a Leviathan gunship is sure to scramble a few neurons. As Crais/Velorak adjusted to the bonding, Velorak finally managed to conquer the brain. At this point Crais began to cooperate with the crew of Moya.
Crais/Velorak is not *totally* Velorak. There is still a good bit of Crais left. Rather he is a mix of Crais and Velorak, with Velorak holding most of the control.