Us Magazine claims the photo was taken in 2004, when the couple were dating and shortly before their marriage.
James - an avid collector of Nazi memorabilia - poses in a German soldier's cap performing a 'Heil Hitler' salute.
A source tells the magazine the photo was taken in James's home and "he did it for shock value".
But despite claims that Sandra's cheating hubby is a white supremacist with a collection of swastika-themed memorabilia who even has a surfboard decorated with Hitler's image, the source says James is "just a history buff" and he's "far from a neo-nazi".
"He had a stepmom whose father lost family in the camps, and they'd talk about it growing up. Jesse's not a white supremacist," insists the source.
Luckily for Jesse, he's not around to cop much of the fall out from this latest scandal. As a fourth woman went public last week claiming to be his mistress, the 40-year-old checked into a sex rehab facility (yep, just like Tiger Woods).
Seems like 'sex addiction' is the new disease du jour in Hollywood.
...Or at least the best attempt at an excuse.