"She told me the purse was not hers, that she had borrowed it from a friend," Las Vegas police Lt. Dennis Flynn wrote in his report of Hilton's arrest shortly before midnight Friday. The friend was not identified.
The 29-year-old celebrity socialite acknowledged owning $1,300 in cash, several credit cards, a package of Zig-Zag rolling papers and a broken tablet of the prescription asthma medication Albuterol also found in the purse late Friday during her arrest at the Wynn Las Vegas resort.
Flynn said Hilton had asked to be allowed to go into the hotel after her boyfriend, 34-year-old Las Vegas nightclub mogul Cy Waits, failed field sobriety tests given by a motorcycle officer who stopped them in a black Cadillac Escalade that Flynn said smelled of marijuana smoke.
Flynn said Hilton denied owning a small plastic "bindle" containing 0.8 grams of cocaine powder that the police lieutenant said fell out when Hilton opened the purse to get a tube of lip balm.
"Hilton admitted the Albuterol ... was hers and is prescribed to her, but the suspected cocaine was not," Flynn wrote. "I asked Hilton whose cocaine it was, and she said she had not seen it but now thought it was gum."
Hilton's lawyer, David Chesnoff, said Monday that he would not comment on the police report.
"As previously stated, the facts of the situation will be tested in a courtroom," he said.
Hilton's publicist, Dawn Miller, did not immediately respond to messages seeking comment.
Hilton faces a low-grade felony possession of cocaine charge that could get her probation if convicted. A violation of that probation could be punishable by up to one to four years in Nevada state prison.
Hilton was freed without bail before dawn Saturday after spending less than three hours handcuffed on a booking room bench at the Clark County jail.
Waits, 34, spent the night in jail before he was released on $2,000 bail. He faces a misdemeanor charge of driving under the influence of alcohol or drugs.
Waits declined comment Monday when reached by The Associated Press. His lawyer did not immediately respond to a message.
Waits is managing partner of the Tryst Nightclub at Wynn Las Vegas, XS The Nightclub at Wynn's Encore resort, and Drai's after hours club at Bill's Gamblin' Hall & Saloon.
Flynn said that while Hilton was in the Escalade, she told him she was "extremely embarrassed, due to all the people taking pictures of her," and asked to go inside the Wynn resort to use a bathroom. Flynn estimated the crowd at about 100 people.
Several photos apparently snapped with cell phone cameras have been posted on at least one Internet site showing Hilton with police at the Escalade on the neon-splashed Strip. Las Vegas police do not have cameras on patrol vehicle dashboards.
Flynn said Hilton was taken to a security holding room inside Wynn to await the arrival of a female officer to accompany her to a rest room.
"Hilton said she needed to put some lip balm on, and I handed her the purse from the table," the police lieutenant wrote. "As she began to open it, I saw a small bindle of what I believed to be cocaine in clear plastic baggy begin to fall from the purse and into my hand."
Hilton briefly faced a marijuana charge last month after a FIFA World Cup match in South Africa, but the case against her was dropped after a woman who was with her pleaded guilty to possessing the drug.
--- Associated Press entertainment writer Anthony McCartney in Los Angeles contributed to this report.