James Goris, 44, was arrested on Tuesday during a raid on his  home in Castlemaine – five months after Victoria Police's e-crime squad, the Australian Federal Police and NSW Police started an investigation into his alleged online activities.

Mr Goris, who served with Victoria Police for five years until 2010, was denied bail in the Bendigo Magistrates' Court on Wednesday facing five charges.

Police hold fears the fraudulent identifications could have been used to enter police stations to obtain a firearm, bypass airport security or aid potential terrorist plots, the court was told.

Detective Senior Constable Cameron Pye said Mr Goris came to their attention during routine monitoring of the "darknet" – an area of the internet made anonymous by encryption and routing – and a site called "Alphabay",

Detectives acted as customers of someone who was believed to be Mr Goris in four separate transactions.

On July 6, they arranged for the purchase of both Victoria Police and Australian Federal Police identification cards, badge wallets and badges for $4800, paid in the online currency bitcoin.

The second transaction involved the purchase of aviation and maritime security identification cards, which would allow the user access to Australia's airports and ports.

Detectives then purchased an Australia Federal Police wallet, badge and identification, along with further Victoria Police identification.

On each occasion, the items were delivered via Australia Post express parcel.

During their online exchanges, Mr Goris allegedly told detectives he could "steal items at will from police stations", including drugs, guns and other evidence.

Detective Senior Constable Pye said no firearms or drugs were found during the police raid on Mr Goris' house, and suggested he was simply trying to lure more customers to his website with the bold claims.

Police badges from various states and territories and the AFP, badge wallets, blank identification cards, specialised card printers, police-issue clothing and digital evidence were found during the raid.

Mr Goris told police he contacted Crime Stoppers after each transaction was finalised to alert them to the whereabouts of the buyer.

Detectives found two Crime Stoppers reports on their own transactions with Mr Goris.

The identification cards were unable to allow the user electronic access to police stations, although Detective Senior Constable Pye said it would be simple for someone to "piggy-back" their way into a station and obtain a gun.

"For the purpose for which they were made, they would absolutely be able to pass their way into a police station," he said.

"I am absolutely saying they could follow another member in and get a gun.

"As he claimed, 'the criminality is only limited by your own imagination'."

Whilst serving with Victoria Police, Mr Goris served in general duties at Fawkner before he was stationed in the uniform branch in Robinvale.

Defence counsel Peter Baker said Mr Goris sold identification for his own financial gain, and had no other criminal motives.

"There was no encryption to allow access to police stations, anyone could see that they weren't legitimate," he said.

Police feared Mr Goris could attempt to flee the country if he was released on bail, given his "expert skill" in creating fraudulent identification – a claim Mr Baker dismissed as "purely speculative".

Magistrate John Murphy said the potential for these identifications to fall into the wrong hands was "frightening".

"I don't think I'm overreacting when I say: 'What if these police badges got into the wrong hands? Could we have armed robberies … a terrorist?' It's a very real threat," he said.

"It was very well thought out. As a former member of the police force, he would know the consequences."

Mr Goris was remanded in custody and will next appear in the Bendigo Magistrates' Court on February 15.

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