Video of Lindsay Lohan sitting outside a Venice Beach, California, triggered a bitter squabble between her publicist and an online gossip editor Thursday.
X17online hinted the video secretly recorded from a nearby car showed something fishy going on between Lohan and several men, including the exchange of a plastic bag and some cash.
Steve Honig, whose job it is to protect Lohan's reputation, accused the website of "knowingly and consciously made inferences about Lindsay that are completely untrue."
"If they had taken the time to look into this a little bit further, they would have found out that the bag contained crystals from a local shop in Venice," Honig said in a statement to CNN.
X17online's Brandy Navarre, in her statement to CNN, thanked Honig for calling attention to her site's video, but she insisted her report "never implied anything about the transaction Lohan appeared to make on the street in Venice Tuesday afternoon."
The report was revised to reflect Honig's statement that the bag exchanged was filled with crystals after Lohan's publicist provided his statement, Navarre said.
"X17online is not reporting anything false nor are we suggesting anything negative about Lindsay Lohan in this post," she said. "The only 'inferences' about what could be happening in the video come from Ms. Lohan's publicist."
Another celebrity news website, RadarOnline, took Lohan's side in interpreting the video. Reporter Jen Heger told CNN that she verified the bag contained crystals and nothing nefarious.
The man who gave her the bag, in daylight on a busy sidewalk, was walking his dog.
Lohan, who spent several months in drug rehab last year, was recently released from strict drug testing requirements by the judge overseeing her probation for drunken driving.
Photographers often follow Lohan, who lives in Venice Beach, as she shops, dines and parties around town. The resulting video and photographs sometimes bring thousands of dollars for the freelance paparazzi when they sell them to online gossip sites, where they can draw valuable web traffic.