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Authorities make arrest in baffling Australian collar-bomb case

By Michael Pearson, CNN
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Collar bomb suspect arrives in court
  • NEW: The victim describes the ordeal as "all very surreal"
  • The suspect in Australian "collar-bomb" case will be held until at least October 14
  • Police say Paul Peters broke into the family home of an 18-year-old Australian girl
  • They say he attached a fake bomb to the victim and left a note demanding money

(CNN) -- On the afternoon of August 3, a graying, slightly paunchy, well-dressed man in a mask and carrying a baseball bat strolled into the bedroom of an 18-year-old Australian woman studying for a school exam. He strapped something that seemed to be a bomb to her neck and told her not to move.

Then he left.

With that, a man police now identify as Paul Douglas Peters, 50, touched off a baffling international investigation that eventually reached 9,317 miles across the ocean to Buckner, Kentucky, where an FBI team arrested Peters on Monday.

Authorities say Peters attempted to extort money from Madeleine Pulver's family in suburban Sydney by fastening a black box around her neck that he said in a note contained "powerful new technology plastic explosives" that would go off if she did not follow his instructions, according to a complaint for provisional arrest filed Tuesday in U.S. District Court in Louisville.

Those instructions included orders to write to an e-mail address and wait for details on handing over an unspecified amount of money.

Pulver spent nearly 10 agonizing hours in her bedroom as authorities tested the box to make sure it would not explode before removing it from her neck.

At the same time, authorities allege, Peters was stopping off in his four-wheel-drive Range Rover at a library and video store to check the e-mail account he'd given Pulver and whiling away at least part of the time at a liquor store browsing for wine, a Sauvignon Blanc to be precise.

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Peters' attorney, Scott Cox, said the investment banker and attorney will contest the charges.

"It is my understanding that he has no criminal history whatsoever," Cox added.

"We are enormously relieved that an arrest has been made," father Bill Pulver said. "These past two weeks have been a very difficult time for us."

On Wednesday, Madeleine Pulver told reporters the incident was "all very surreal."

"I'm glad it's all over," she told CNN affiliate Seven Network in Australia.

Investigators in Australia and the United States say they were able to link Peters to the e-mail address using video surveillance and access logs, and found credit card records showing that he had purchased a thumb drive, lanyard and baseball bat identical to those used in the extortion attempt, according to the complaint.

A magistrate in Kentucky ordered Peters, an Australian national, held without bail until at least October 14, when he may be allowed to apply for bail. That's also when Australia will be required to request Peters' extradition. Cox told CNN Radio that the proceedings may include a probable cause hearing.

Australian police plan to seek charges against him including kidnapping, aggravated breaking and entering with intent to commit a serious indictable offense, and demanding property by force with intent to steal, according to the complaint.

Peters is not accused of any U.S. offenses.

Assistant Commissioner David Hudson of the New South Wales Police Department said Peters was not yet a suspect when he flew to Louisville on August 8, arriving the next day. But "a fairly detailed chain of circumstantial evidence" -- including Pulver's detailed description of the "heavily disguised" assailant -- ultimately led them to the United States and the arrest.

According to the complaint, a man wearing a business shirt, slacks and a blue, yellow and white mask that covered everything but his mouth and a pair of "saggy and wrinkly" eyes sauntered into Pulver's room, carrying a backpack and a black aluminum baseball bat.

He said he wasn't going to hurt her, forced a black box around her neck using something like a bike chain and locked it. To this he added a lanyard with a green thumb drive and a plastic document sleeve containing a note.

"Count to 200," the man said, according to the complaint. "I'll be back."

Pulver waited a few minutes, called out to the man but got no response. She contacted her parents and asked for police, and after a tense nine or 10 hours, tests concluded that the device was not a bomb.

Australian and U.S. authorities say the e-mail account listed in the note was created May 30 at a computer using an Internet address assigned to the Chicago airport, where travel documents indicate Peters was on that day.

Investigators say video surveillance linked him to the only three logins to the account, all in the hours after the break-in at the Pulver home.

Surveillance cameras at a library in Kincumber, Australia, showed him pulling up in a silver Range Rover and leaving moments after the first login. The next two came at a video store in Avoca Beach, Australia. Surveillance cameras from a liquor store next to the video shop showed a man resembling Peters entering the store on two separate occasions that evening, each shortly before the e-mail account was accessed.

Peters apparently spent part of this afternoon waiting for a response by shopping for Phillip Shore Sauvignon Blanc wine, according to a liquor store employee who police said remembered talking to Peters. The man, the store clerk said, appeared to be just "wasting time," according to the complaint.

Investigators say credit card receipts indicated that Peters bought the thumb drive, lanyard and baseball bat used in the incident in the weeks leading up to it, as well as a deleted file on the thumb drive that forensic analysis showed was created on a computer called "Paul P."

Authorities in Australia alerted their U.S. counterparts to Peters after finding travel records showing that he had flown to Louisville on August 8 and had previously wired money to a woman living in Buckner, Kentucky, who turns out to be his former wife.

The FBI sent an agent to check out the house two days later and spotted Peters in the backyard. "I don't think he resisted in any respect," Scott said.

Authorities do not believe his ex-wife was involved in or aware of the plot. The couple divorced in 2007, according to Cox.

Peters is a globe-trotting investment banker who went to primary school in Hong Kong, attended college in Sydney, ran investments in Malaysia and spent quite a bit of time in the United States, where his ex-wife and three school-age children live, according to authorities and his attorney.

A woman who identified herself as his hairdresser was quoted by the Daily Telegraph newspaper in Australia as saying he was a "happy-go-lucky chap."

"I was actually really shocked, you know, I couldn't believe it because he was such a nice fella," the newspaper quoted Tammy Schreiber as saying.

How he ended up in the wealthy Sydney suburb of Mosman, where many athletes and celebrities live, allegedly attempting to extort money from the Pulvers remains something of a mystery.

An Australian police official who accompanied FBI agents on the raid in Bucker said the Pulvers didn't know Peters. But it appears he was formerly employed by a company with which the Pulvers have links, according to the complaint filed in federal court.

The complaint didn't elaborate, and the nature of the specific link wasn't immediately clear Tuesday.

A LinkedIn profile that appears to be Peters' lists his job as managing director at Douglas Corp., formerly Allco Finance Group Malaysia. No Web listing for such a company could be immediately located. Peters was formerly the U.S. managing director at Connell Finance Co., according to the profile.

CNN's Susan Candiotti contributed to this report.