Arsalan Khawaja, 39, was released on bail after appearing in a Sydney court on charges of forgery and attempting to pervert justice.
Sri Lankan-born PhD student Nizamdeen spent a month in solitary confinement at a remote high-security prison, where he was questioned about targets including not just Turnbull, but reportedly also the Sydney Harbour Bridge and Opera House.
He was eventually released in September, when police realised the script did not match his handwriting. The charges were later dropped.
"What we will be alleging is that he (Nizamdeen) was set up in a planned and calculated manner. Motivated, in part, by a personal grievance," New South Wales assistant commissioner Mick Willing told reporters.
Willing said police believe Khawaja orchestrated the set-up and may have been motivated by a dispute over a woman.
"We will allege that that is part of the process. But as you can appreciate, the matter is before the court, so we can't go into much detail," said Willing.
Australian police now say they "regret" arresting and holding Nizamdeen, and have paid his court costs. Willing confirmed there is no ongoing threat to the community.
Nizamdeen is seeking further damages from authorities and has since returned to Sri Lanka.
"It's a terrible experience. He is a young man that has done everything right in life. And he has gone through supermax jail -- unforgivable circumstances."
Nizamdeen's exact relationship with Khawaja has not been stated by police. Pakistan-born Australian batsman Usman Khawaja, who is due to make a return from injury this Thursday against India in the first of a four-Test series, made a brief statement calling for privacy while the case ran its course.
"This is a matter for police to deal with. Out of respect for the process it would be inappropriate for me to make any further comment," he said.
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