Detective Katherine Frank was the first witness to take the stand in the trial of Smith's lawyer-boyfriend, Howard K. Stern, and two doctors who are accused of conspiring to supply the model with vast amounts of powerful opiates and sedatives. They are not accused of causing her death.
All three have pleaded not guilty.
Smith, 39, was found dead in the Hollywood, Fla., room in February 2007. Frank testified that shortly after her body was found and taken away, Stern fell to his knees in the room and began crying.
The detective said the duffel bag contained more than $8,000 in cash.
Smith's bodyguard, who was one of the last people to see her alive, told police that he was owed the money and demanded they hand it over but they refused, Frank testified.
The guard, Maurice Brighthaupt, was expected to testify later in the day.
Frank's testimony came on the heels of compelling opening statements Wednesday by a prosecutor and three defense attorneys who disputed whether it's a case of three scheming conspirators feeding drugs to an addict or a love story of three caring people dedicated to helping Smith overcome her chronic pain.
Superior Court Judge Robert Perry has said Smith's cause of death is not an issue in the trial of Stern, Dr. Sandeep Kapoor and Dr. Khristine Eroshevich.
Brighthaupt previously said he saw Stern and Eroshevich giving Smith drug injections, a claim that Stern's lawyer says is false. Brighthaupt's cross-examination is expected to focus on changes he made in his story since 2007 when he was paid $150,000 for interviews with various cable TV outlets.
He has claimed that many things he said then were lies intended to protect Smith's reputation.