Queenstown police are still hunting for two alleged kidnappers, despite the Armed Offenders Squad (AOS) appearing to arrest two people in a road block on the outskirts of the resort.
Witness Shay Muddle said said a man and a woman were taken away at gunpoint.
A witness, Queenstown resident Shay Muddle, said a man and a women were lead away, by black clothed officers.
"They all had rifles...it looked pretty serious...I think people are feeling it's just a bit strange this sort of thing doesn't happen here often," Mr Muddle said.
Joseph Armstrong, who was allegedly kidnapped last Tuesday, was found last night by the police
at the Lakeview Holiday Park. He needed medical attention for head injuries.
Two men - Mark Taylor, 17, and a 36-year-old Invercargill man - have already appeared in court in connection with the investigation.
The police have been looking for Joshua Veint and Pita Wilson, and Inspector Olaf Jensen said urged them to give themselves up.
Residents in the resort town are becoming increasingly jittery as the kidnapping incident drags on and as social media fuels speculation of the motives behind the alleged kidnapping. As well, the AOS has raided several homes and businesses in the area during the past three days.
However, Mr Jensen said residents had nothing to fear from the suspects but that they should not be approached.
Mr Taylor appeared in the Queenstown District Court this morning charged with kidnapping. He was in the dock for just 30 seconds before being stood down pending a bail application and was remanded in custody.
He will reappear in a bail application hearing, which the judge indicated would be held in closed court, in Invercargill tomorrow.
A 36-year-old man arrested in Invercargill on Saturday was charged with being an accessory after the fact to injuring, before being released on bail.
Social media postings
A post appeared on Mr Armstrong's Facebook page on Sunday night purporting to be from the then missing man. The post claimed that the kidnapping was a hoax, and went on to apologise to Mr Veint and Mr Wilson's families.
However, it was not known if the post was from Joseph Armstrong himself, with friends turning to Facebook message to question the spelling and grammar.
"Do you mean he's ok????" asked one post.
"Doesn't sound like Joseph at all" said another.
"If this is Joseph, just ring your mum" said a third one.
This morning, friends of Mr Armstrong were posting comments of relief at his discovery.
Both Mr Wilson and Mr Vient come from well-known Queenstown families.
Mr Veint's grandfather said his grandson was normally a sensible person, and he should give himself up to police.
He said the family had tried to contact Mr Veint but had not heard back. He also said the two wanted men were work mates of Mr Armstrong.
Mr Wilson is involved in the quarrying business, and is a former Southland Stags and North Harbour rugby player.
He survived an assassination attempt in Australia in 2006.
The police believed Mr Armstrong was kidnapped last Tuesday.