An Australian investment banker who chained a fake bomb to a terrified teenager in a bizarre blackmail plot has been jailed for 13 and a half years.

Madeleine Pulver, then 18, was studying at home alone in her family's Sydney mansion last August when Paul Peters walked in wearing a rainbow-striped ski mask and carrying a baseball bat.

He tethered a bomb-like device to her neck along with a ransom note, then slipped away, leaving the panicked teenager alone. In a tense operation that made world headlines, it took a bomb squad 10 hours to remove the device, which contained no explosives.

At the sentencing in Sydney, Judge Peter Zahra said Peters intended to put the fear into the young victim that she would be killed. "The terror instilled can only be described as unimaginable," he said.

The judge gave Peters less than the maximum sentence of 20 years, acknowledging he had pleaded guilty and was probably depressed at the time.

After attaching the device to the teenager, Peters, 52, fled to the US, but police used an email address he left on the ransom note to track him down. Authorities arrested him two weeks later at his ex-wife's home in Louisville, Kentucky, and extradited him to Australia. He pleaded guilty in March to aggravated break and enter and committing a serious indictable offence.

The defence had argued that Peters was depressed, drinking heavily and exhibiting wild mood swings before committing the crime. He had recently split from his wife, was separated from his children and had become obsessed with a book he was writing about a villain out for revenge, his lawyer Tim Game said during earlier sentencing hearings.

A psychiatrist for the defence said Peters may have tried to become the evil protagonist in his book. Peters said he had no memory of the crime. But prosecutors said there was a much simpler explanation for Peters' bizarre actions - money.

Prosecutor Margaret Cunneen said during an earlier hearing that Ms Pulver was never the intended target of Peters' crime. The investment banker was having financial problems and originally travelled to Mosman - the wealthy Sydney suburb where the Pulvers live - to hunt down the beneficiary of a multimillion-dollar trust fund he had learned about, she said.

When he arrived in Mosman, he bumped into a neighbour of the Pulvers whom he had met while doing business in Hong Kong. That man then became Peters' new target, Ms Cunneen said. But on the day of the attack, Peters walked into the wrong house. Madeleine Pulver was, in the end, the unwitting victim of Peters' incompetence, the prosecutor said. Embarrassed by his bungled extortion bid, Peters concocted a story about being delusional and not remembering the crime to save face, Ms Cunneen said.