Not true. Here's a Q&A from Google's site:

Q: If I nofollow a substantial number of my internal links to reduce duplicate content issues, will this raise a red flag with the search engines?

A: The number of nofollow links on a site won't raise any red flags, but that is probably not the best method of blocking the search engines from crawling duplicate pages, as other sites may link to those pages. A better method may be to block pages you don't want crawled with a robots.txt file.

Notice that Google has made no distinction between internal or external links. It simply says that nofollow links won't raise a red flag.