The revelation is one of many contained in a police report obtained by PEOPLE.
In a formal inquest scheduled for March 26, Bahamian officials will attempt to decide whether anyone intentionally or accidentally contributed to the sudden death of Daniel, 20, last September.
Among the disclosures recorded in the police report:
Ford Shelley, whose father-in-law Ben Thompson, a South Carolina developer who had a brief relationship with Smith and who claims to own the Bahamian house where Smith resided with Stern, told police that Stern found drugs in Daniel's possessions.
The day Daniel died, Shelley told police, Stern returned to the house and checked Daniel's clothing. Shelley said two white tablets fell out of Daniel's jeans pocket and that Stern then "went immediately to the bathroom" and "seconds after, I heard the toilet flush." Stern, he says, told him "that he had taken care of a problem."
Shelley also talked about how Stern told him about assisting Anna with her drugs.
"He informed me that he would administer medication to Anna but would not allow her to medicate herself, in fear that she would overdose," Shelley stated. "All of the medications are prescribed under fictitious names, so as to deceive the pharmacist as to who is the real recipient."
(Ron Rale, one of Smith's attorneys and a former law partner of Stern's, says all of Shelley's assertions are false. "We deny everything," says Rale. "It's ridiculous.")
Jack Harding, a private investigator based in California, told police that last year Daniel expressed to him "his concern about the kind of persons his mother was associating with." Daniel also said "he did not like the idea that she was moving to the Bahamans" and that he "felt that her associates were taking advantage of her." NEXT PAGE