A man has been accused of faking his own kidnapping so he could spend New Year's Eve with his lover and not his wife. 

Paul Iera, 35, was arrested on Thursday before being charged with make false accusation with intent subject other to investigation, and false representation resulting in police investigation.

Police prosecutor Sergeant Kate McKinley told Wollongong Local Court on Friday the investigation cost the force and the state government well over $25,000, as well as 100 to 200 hours of wasted time. 

Police allege Iera left his home just before New Year's Eve at 11.45pm on December 31, telling his partner he was going to meet his 'financial guy' in Dapto, south of Wollongong. 

However, his partner then received a text from a sex worker, claiming to have kidnapped Iera.

The court heard the sex worker, who Iera had history with, apparently sent several texts to Iera's partner explaining the kidnapping. 

The texts read: '[Partner] it's '[name]' thank you for sending Paul to me, now payback is a b**** bye bye.

'But I'm going to be fare (sic) OK, we will keep him with us until the morning wen (sic) he gives us his bike we call it square, no one's touching him my word I'll give you hun OK'.

Iera's partner believed the sex worker was holding him hostage over a $7000 dirt bike and, fearing for his welfare, contacted police. 

Detectives immediately started investigating, with officers poring over CCTV and speaking to witnesses. 

However, between the time of the texts sent to Iera's partner, CCTV cameras allegedly captured him arriving with his lover to her Dombarton home, the Illawarra Mercury reported.

He was wearing a basketball singlet and carrying his phone and an overnight bag.

NSW Police released a statement on Friday after Iera faced court.

'It was established the man allegedly made up the story about his own kidnapping,' police said.

The court heard Iera called his dad on New Year's Day, telling him he had been kidnapped the night before but was back in Wollongong.

He said his kidnappers were dropping him back at his car nearby.

Investigators found cell tower data showing the call came from the Dapto area.

Subsequent CCTV footage allegedly showed Iera and his lover getting into her vehicle at her home in Dombarton, seven minutes after the call.

The woman, believed to be Iera's lover, then returned to her home a few minutes later, having allegedly dropped Iera back off at his car. 

She then sent Iera a message that said: 'Omg Paul I can't believe what you have done how was I supposed to react'.

Police now believe her message was referring to Iera's earlier call to his father which she had overheard. 

At around 10.30am, police conducted a 'high-risk vehicle stop' on Iera's white van, believing he was being held hostage inside.

The court heard Iera allegedly told them he was kidnapped by unknown men but identified the sex worker as directing the kidnapping.

The court also heard Iera claimed he was driven far away before being left at his car in the morning and told to wait for instructions. 

Police dispute this and say no vehicle matching that of the alleged kidnappers was seen.

Investigators believe Iera allegedly fabricated the kidnapping to spend New Year's Eve with his lover after reviewing his phone records. 

A crime scene was also established at his mistress' home, which was covered by a high-quality CCTV system.

Iera was supported at court on Friday by his partner, his mother and his sister.

Magistrate Chris McRobert described the case as 'quite bizarre' but decided to grant Iera bail.

He must report to police daily, not contact prosecution witnesses with the exception of his partner, and have someone deposit a $2000 surety.

He will return to court later this month.