Well, I think I have a few ideas on how he had the power…
One, though this is hard to tell without seeing the alignment of the Country’s deity, could be that Tytonis granted him the power and armies to do with as he pleases so long as he did something for him. What that would be, I cannot say. But this god may very well be a benevolent god (as his armor colors may indicate) and this could be entirely wrong.
Second theory, you mentioned the little imps that are used to smuggle goods, kill civilians, etc. Perhaps the False King had opened some sort of portal to a demonic dimension and built himself a demon army, but in turn it ended up releasing nuisances like those imps and other creatures into the world.
Third, and my most solid theory I believe, the False King used deceit and lies to get the various goblin hordes to do his bidding, such was the case with Tobias:
The turmoil of the queen dead, and possibly the king at a later point, led the False King to be able to rally in some support politically and eventually stage a coup to take over the country. The goblins were not much of a use to him after his rivals were eliminated, so he immediately started to off them when their jobs were done.
And, since there we no bodies (at least not mentioned) in this quote:
Perhaps a bit of necromancy was at work for him?