This sentence is poorly written. As written, the police are hiding. “Cooper ... was found by the police [who were] hiding behind some nearby bushes.” Most readers would reread it and decide that Cooper was hiding. Here is a better version. “Cooper ... was found hiding behind some nearby bushes by the police. Since the sentence is awkardly long, I would split it into two. “Cooper ... ran off. The police found him hiding ...”

yes, it means that when the police found Cooper, he was hiding behind some nearby bushes.