Karl was the eldest of the Bacon Brothers. When he was 20 years old, he got into trouble with gambling. He was an addict. He blew the entire Bacon fortune in five minutes to a scoundrel known as Lando Calrissian. Karl nearly killed himself, as their mother was ailing and the doctors felt she had only six months to live if a cure couldn't be paid for.
Karl's younger but far more capable brother Bill suggested they start working as smugglers. The third brother, Roy, joined them, along with cousin Yotts, as they worked dilliegently to smuggle weapons, spice, and anything else they could transport illegally. The youngest Bacon, Giran, stayed to tend to their mother. They sent most of their earnings back home to help Giran pay for her medical expenses, but the effort proved fruitless. Giran joined them when their mother passed, and the group went to Tatooine in search of work as thugs.
In Mos Espa, the gang met Jim Toback, a human they let join. Karl was the only one not laughing at Jim's Lando Calrissian impression. They were able to secure work as bodyguards for Wioslea, before betraying him/her/it/shim to Jabba The Hutt and falling under the crimelord's employ. Karl was stationed aboard the Sail Barge as foreman, and essentially just wandered around making sure everyone else was working. It was at this point he was given the nickname "Klaatu" by Bib Fortuna, but Fortuna actually called all the Bacon Brothers (and cousin) that, since they all looked the same to him.
One day, the Brothers discovered that Karl had wagered his earnings for the entire year in a game of Sabacc with a human skiff guard the night before. They were outraged, and even Karl couldn't believe how stupid he'd been. It was what had killed their mother, and he'd once again made the same mistake. He'd let them all down, but mostly himself. After Bill berated Karl in private, the other Brothers all left Karl alone as they set sail on Jabba's Barge to the Sarlacc Pit. He just stared out at the dunes, remembering his mother and wishing to join her. Within an hour, Karl got his wish when Luke Skywalker blew the barge up.