Collar bomb suspect’s family shocked

The family of Paul Douglas Peters is shocked by his arrest in Kentucky over a collar bomb hoax targeting a schoolgirl in Australia, saying he wouldn't have the "balls" to carry out such a crime.

The 50-year-old Australian was led into the U.S. District Court in Louisville, Kentucky, about 10.30am on Tuesday with shackles on his wrists and ankles, after being picked up by an FBI SWAT team co-operating with Australian police.

Peters' is expected to contest the charges relating to the incident in which he is alleged to have attached a fake bomb device around the neck of Sydney school girl Madeleine Pulver after breaking into her parents' mansion where she was studying.

NSW Police Robbery and Serious Crime Squad head Superintendent Luke Moore, who was in court, told reporters it could take "some weeks" to apply for Peters' extradition to Sydney, AAP reports.

Police have 60 days to lodge their application, and U.S. Judge Dave Whalin has set a hearing for October 14.

Peters did not apply for bail.

His brother Brent Peters, 52, from the Blue Mountains west of Sydney, told Australian Associated Press on Wednesday that he doubts he is the person responsible for the horrific incident involving Pulver.

"I could not believe it, it's just flabbergasting," Mr Peters told AAP on Wednesday.

"He wouldn't have the balls. I still don't believe it. I still think there's more than meets the eye in this case."

If he is extradited, police say Peters will face charges of kidnapping, aggravated break and enter with intent to commit a serious indictable offense and demand property with intent to steal, AAP reports.

In an indictment released by the U.S. court, NSW police allege that on August 3 Peters broke into the Pulver family home in Mosman, on Sydney's lower north shore, wearing a balaclava and carrying a baseball bat, and attached the device around Pulver's neck.

It was 10 hours before bomb squad technicians removed it the collar which turned out to be a hoax.

Pulver told reporters outside her home on Wednesday she was "very relieved" and "glad it is all over".

AAP reports:

Brent Peters said his brother had no expertise that could have fooled bomb experts.

"I would not know who'd have any technical capability whatsoever like that. We're old school," he said.

Mr Peters last saw his brother in 2010 and said he was doing well financially.

"Look, the guy was a quarter-of-a-million-dollar guy a year over in America," Mr Peters said.

"From what I know, he had quite a lot of cash sitting in a term deposit.

Mr Peters says their father, Doug, is shattered by his son's arrest.

"He's shattered, he can't believe it," Mr Peters said.

"He could not believe someone of Paul's caliber would be even capable of breaking into someone's house.

"It is not him. I'm flabbergasted. It can't be him."

Brent Peters also said he was concerned about his brother coping in jail.

"I just hope he does (cope), because this will be a massive shock to him, a massive shock to his wife and his three girls," he said.

Peters had a privileged upbringing, and attended an elite Sydney school and graduated from university in law and economics.

He was arrested at his ex-wife's home outside of Louisville.

He and Debra Peters have three daughters.

"His wife is handling it poorly," Mr Cox said.

NSW police, according to the indictment, were led to Peters by his Gmail email address.

Court records unsealed overnight revealed Peters had ties to a company connected to the Pulver family, ABC reports.

"The police have obtained information that Paul Douglas Peters was formerly employed by a company with which the victim's family has links," the criminal complaint filed in support of extraditing Peters to Australia said.

Peters was a managing director of the Allco Finance Group's Malaysian arm between 2006 and 2008. He took over the arm in 2008, months before the rest of the company's high-profile collapse, it reports.

He previously worked as a managing director of the Connell Finance Company.

Peters is also understood to have lived in Hong Kong, the setting of the novel Tai-Pan that was allegedly alluded to in the letter left with the fake bomb.

Police also say he bought a one-way ticket to fly on August 8 from Sydney to Kentucky via Chicago.