Our sources say ... former nanny Dawn Drago is a convicted shoplifter -- something she didn't disclose on her employment application. But more to the point, we're told she's extremely bitter because she was fired for falsifying time sheets.
We're told Kim is adamant ... Drago's drug claims are completely false and the lawsuit is retaliation for getting 86'd.
A rep from the law firm representing Drago tells TMZ, the shoplifting conviction is irrelevant "because she was not working at a shop." That's the quote. We don't understand it either.
One final thing ... as far as we can tell, Diddy doesn't believe the allegation either, because he's taken no steps to remove the twins from the house.
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