Perth man SuperDaE, who describes himself as a freelance security analyst, got his paws on some internal Microsoft papers and a Durango development kit.
He leaked information about the Xbox on Twitter and was visited by a Microsoft employee who wanted the Durango back.
Microsoft really just wanted to know where all the gear was and did not seem to be in a hurry to get it back straight away, SuperDaE said.
However, Aussie police, the FBI and assorted goons showed up at his house with a search warrant and a battering ram.
They tore the place apart and took everything that was remotely electronic including SuperDaE's computers, mobiles and banking cards.
The coppers confirmed to the Sydney Morning Herald that the Technology Crime Investigation unit was conducting a multi-jurisdictional investigation into computer related offences.
SuperDaE said he fears what most Australians do - that the FBI is going to transport him to the US where he will face one of their legendary kangaroo courts and be sentenced to 1000 years in jail.
Ironically, Microsoft, the cops and the FBI did not get their hands on the Durango which SuperDaE had the foresight to hide. He said that will remain a guarded secret. We guess he needs some leverage.