Paul Douglas Peters left a trail of electronic footprints across two hemispheres that led police unerringly from the wealthy Sydney suburb of Mosman to La Grange, Kentucky, just outside the city of Louisville.

There, wearing a pink shirt and beige shorts, the 50-year-old businessman accused of strapping a bomb around the neck of 18-year-old Sydney student Madeleine Pulver was arrested on Tuesday by an FBI Swat team and New South Wales detectives.

After a 10-minute hearing, Peters was remanded in custody for an extradition hearing on October 14, charged with aggravated break and enter with intent to commit a serious indictable offence, demanding property by force and with intent to steal, and kidnapping.

In court was his former wife and mother of his three school-age children, Deborah Peters, still a close friend, whom Peters was staying with when the FBI descended.


She cried during the hearing and refused to talk to reporters.

"His wife is handling it poorly," said Peters' lawyer, Scott Cox.

Peters' only known connection to the millionaire Pulvers was previous employment with a company with which the family had links.

Why he allegedly chose their home and terrified Madeleine with a fake collar bomb has not yet been revealed.

Peters is one of four children of a wealthy Cathay Pacific pilot, educated at Sydney's elite Bellevue Hill school and Scots College, and an economics and law graduate of Sydney University.

He worked for accountancy firm Arthur Andersen and headed Sydney-based global financier Allco's Malaysian branch before its collapse in the global financial crisis.

Since then, Peters has been conducting business between Australia and the US, living north of Sydney in the Gosford suburb of Copacabana when at home and in La Grange during American visits.

Documents lodged with the District Court in Louisville allege that on August 4, Peters invaded the Pulvers' home and left Madeleine with the fake bomb, a USB stick, documents and a warning note.


"Powerful new technology plastic explosives are located inside the small black combination safe delivered to you." the note said.

"The case is booby-trapped [and] can be opened ONLY if you follow the instructions and comply with its terms and conditions."

The Pulvers were to confirm agreement by email to dirkstruan1840 Dirk Struan was the fictional mogul of 19th century Hong Kong in James Clavell's 1960s novel Tai-Pan.

The email address was a key step in the electronic trail.

The court documents said the Gmail account had been set up at Chicago Airport on May 30. Immigration records established Peters had been there that day.

The account had been accessed three times: at Kincumber public library about two hours after the "bomb" was strapped to Madeleine, and twice later at the Avoca Video Store at Avoca Beach.

Both are on the Central Coast, near Copacabana.

Security footage from the library showed a grey-haired man aged between 50 and 60, wearing a blue business shirt with the sleeves rolled to the elbow and beige pants, arriving in a Range Rover and spending a few minutes inside. The description matched that of Madeleine's assailant.

A dealer identified the Range Rover as having been built between 1996 and 2001, and a check of vehicle records showed Peters owned such a model. His licence picture allegedly identified him as the man who had been at the library and, later, the video store.

A video store staff member said a man in his mid-40s, wearing a purple and white business shirt with rolled sleeves and beige pants had visited the shop twice to use its public internet computers, both times coinciding with access to the dirkstruan1840 Gmail account.

Security cameras at the adjoining liquor store had filmed the man, who, according to a staff member, had "wasted time" there, asking for an out-of-stock Phillip Shore sauvignon blanc, the documents said.

The USB stick left with Madeleine gave further clues.

Among its deleted documents were similar notes mentioning explosives and demanding money, including one in Word format written by a computer with the identification of "Paul P".

Tracking backwards, detectives allege Peters had used his MasterCard on July 4 to buy a USB with a purple lanyard, identical to that placed around Madeleine's neck.

They also allege that security footage showed Peters entering a Rebel Sport store on July 16, using his MasterCard to buy a black baseball bat.

The documents allege detectives further found that in 2009 Peters had wired money from Australia to Deborah Lee Peters of Heather Green Boulevard, La Grange.

They allege that FBI agents had confirmed that mail was received there for Doug and Deborah Peters, and that both lived at that address.

On August 11 an FBI agent checking the address saw the property was for sale and noticed a man matching Peters' description in the backyard.

On Tuesday he was arrested there.