I believe your sister heard a misinterpretation of an incident that happened in Hot Springs Arkansas, earlier this year.
Bunch of articles about it hereI'm not aware that the person shooting the video was ever approached by the police concerning it. Haven't watched the video in months though.
As for whether or not you can videotape police...
Google "videotaping police" and start reading. Lots of stories explaining it's legal (even some federal case results), other stories of police using wiretapping laws to arrest those who do videotape them, and still others suggesting that even if it is legal, the police tend to frown on the activity.