Transgender GropeGate: David O. Russell Did What Now?

Oscar nominated director David O. Russell (The Fighter) has had his share of controversial moments in the public eye, but this takes the cake, and then some: According to a police report filed with the Broward County Police Department in Florida, Russell inappropriately groped his 19-year-old adoptive pre-op transgender niece while they were working out last week. Hit the jump for details if you dare, because this reaches a level of bizarre that can be a wee bit difficult to wrap your head around.

An investigation is underway into the bizarre family incident, which Russell insists was innocent and consensual. But he's at least admitted that the incident did happen. And the event seems to have gone down as follows, as TMZ reports, while Russell and his niece were doing abdominal exercises:

The niece -- who does NOT have a blood relation to Russell -- told cops they began to talk about her breasts ... and how certain hormones she's taking have made them larger.

According to the report, the niece claims Russell then "put his hands under [her] top and felt both breasts."

Cops say the woman said she felt "uncomfortable" ... but admitted she "did not ask him to stop at any time."

Investigators later contacted Russell ... and according to the report, the director confirmed he DID touch his niece's breasts ... but only after she gave him permission.

Cops say Russell explained that during the conversation about her chest, the niece informed him that one of her breasts was bigger than the other. The official report says ... Russell told cops his niece then "allowed [him] to feel both of [her] breasts."

So... yeah. According to Russell's rep, ""David O. Russell emphatically denies any wrongdoing and has cooperated fully with the authorities." We'll have to wait and see how this one shakes out.

In the least, it makes yelling at Lily Tomlin look like a totally normal tea party. And despite headlines like "David O. Russell Fingered in Quasi-Incestuous, Transsexual Groping Claim," it's not quite as incestuous as the setup of Russell's feature debut Spanking the Monkey, so there's that. Developing...

[TMZ, The Wrap]