A male shopping with Lindsay Lohan at the beachside jewelry store in Venice, California, distracted an employee as the Mean Girls star stole a gold designer necklace -- this according to a law enforcement source who has intimate knowledge of the surveillance video.
"Lindsay had removed a necklace of hers that she was wearing when she tried on the necklace in question," the source close to the case told RadarOnline.com, exclusively.
"As Lindsay was putting her necklace back on, it's apparent the store clerk was distracted by the male companion that was with Lindsay."
"The video then shows Lindsay and her male friend walking out of the store, all while Lindsay was wearing the necklace," said the source.
"It's all clearly visible on the video."
Lohan, 24, pleaded not guilty on February 9 to a single count of felony grand theft; if convicted, she could be sent to prison for up to three years.
Worryingly for the starlet, prosecutors believe the store surveillance video is strong evidence against her and one source even described it as a "smoking gun".
"The District Attorney believes that Lindsay's friend distracted the clerk on purpose and that could bolster the case if it goes to trial against Lindsay," said the source.
"This simply wasn't a case of miscommunication of a necklace being loaned and not returned, as Lindsay has claimed."
"Distraction theft" -- as it is known in some legal quarters -- if proved, can help establish a criminal's intent.
Lohan's high-powered lawyer Shawn Holley didn't receive the video until Wednesday at L.A.'s Airport Courthouse, where the actress appeared before Superior Court Judge Keith Schwartz for a routine hearing.
"This case does involve jail time -- period," Schwartz told Lohan, warning actress that he would send her to jail if she accepted a plea deal offered by prosecutors.
"If you plead in front of me -- if this case resolves in front of me -- you are going to jail. Period. It may be an issue as to amount of time."
Schwartz said that if Lohan rejects the offer the case will be set for a preliminary hearing in front of another judge; she must decide by her next court date on Thursday, March 10.