This is a rush transcript from "The O'Reilly Factor," June 30, 2008. This copy may not be in its final form and may be updated.

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JOHN KASICH, GUEST HOST: In the "Unresolved Problem" segment tonight: an alarming story out of San Francisco involving juvenile crack dealers who are here illegally.

According to the San Francisco Chronicle, probation officials are using the sanctuary city policy to protect these kids from federal deportation. In some cases, getting the city to pay for their flight back to Honduras and doing nothing to stop them from returning. The Chronicle says the feds are now conducting a criminal investigation into whether San Francisco has been skirting U.S. immigration law.

Joining us now from San Francisco, Joe Alioto Veronese, a California criminal justice commissioner and a former San Francisco police commissioner.

Joe, I read today — I couldn't believe it — that San Francisco is actually flying people who have been caught dealing crack cocaine and paying for their flight back home so they won't be deported, so they can come back to the country some day. What is going on?

JOE ALIOTO VERONESE, CALIF. CRIMINAL JUSTICE COMMISSIONER: What we're finding today is you have big city mayors, even small city mayors like Mayor Gavin Newsom in San Francisco, who are dealing with federal problems because the lack of immigration policy at the federal level. That is our reality.

So when we have these kids here in San Francisco, we have to deal with them. So we deal with them through rehabilitation. They're in our justice system. We're finding ways to fix the problem.

And you know, under two circumstances that we know of, two individuals, yes, they were flown to Texas, I believe, and put on planes from there to go back to Honduras to be with family members to get away from the problems and not be San Francisco's problem anymore. We're just — you know, the real sin here is the fact that there's no federal cooperation — federal, state and local cooperation on this particular issue.

KASICH: Joe, Joe...

VERONESE: And there needs to be.

KASICH: Joe, you got this guy, Tim Hedrick. He was recently the head of the narcotics unit. He says these kids have been arrested as much as four and five times, and they're dealing crack cocaine.

VERONESE: Right, these kids...

KASICH: You know, they're not walking around just, you know, jaywalking. They're dealing hard drugs to people. Maybe even to children there. What do you mean we don't know how to deal with them? Deport them. Get them the heck out of there.

VERONESE: It's more complex than that. They're not just dealing drugs. These kids are mules. They're being sent here to the United States under threat of harm to their families, and these are the details that these probation officers are dealing with on a daily basis.

But there needs to be cooperation at the federal level, and there also needs to be some immigration reform, which we're not seeing it. You know, I read — I've seen your segments. What are we doing? What are we doing? This is a city that is doing...

KASICH: Joe…

VERONESE: ...whether it's on health care, whether it's on solar panel initiatives.

KASICH: Yes, but you're — we're not talking...

(CROSSTALK)

KASICH: Look, we have enormous drug problem in this country, OK?

VERONESE: Yes.

KASICH: You're treating crack cocaine dealers who have been arrested four and five times as though they were jaywalkers. You're not taking it seriously. Now the federal government is investigating your city.

VERONESE: Right.

KASICH: And they're saying that you're violating the law in terms of helping people get back across the border. Why wouldn't you turn them over to the federal government and have the federal government deport them so they can't come back?

VERONESE: Well, that's where the cooperation needs to happen, and you're right about that part about it. But the bottom line is we don't have that cooperation because the city's sanctuary policy, the confusion over the juvenile confidentiality laws here in San Francisco, in the state of California, and then some of the federal laws.

You know, what they're doing is essentially is they're deporting and not reporting to the federal officials such that there would be a record if they came back into the United States.

KASICH: Yes, but why should they come back?

VERONESE: That's where...

KASICH: They shouldn't...

VERONESE: That's where the fault is.

KASICH: Joe, but you know what? Your guys up there in San Francisco, the guy who's in charge of this probation authority, says well we want them to come back and become honest — this is laughable to me — honest hardworking Americans.

VERONESE: Well...

KASICH: You know what. When you're dealing crack cocaine, you got to be thrown out. You ought to be thrown in jail. And so they're deporting these people. And once you deport them, they cannot come back. And now you're city is saying well, wait a minute, you know, we have this sanctuary law, so therefore we're going to ignore the federal law. I think you're in trouble over that.

VERONESE: You know, that's a bigger issue. In California, we went from penalizing to rehabilitation just recently. We're trying to in California rather because we've got this jail overcrowding issue. But these guys are dealing with real problems, and we don't want them necessarily to come back to San Francisco...

KASICH: Then deport them.

VERONESE: ...to deport people. That is not the job of San Francisco…

KASICH: But Joe...

VERONESE: That's a federal issue. And that's the problem here.

KASICH: ...understand what you've done. Joe, the city has taken taxpayer money and bought airline tickets to send these kids back to their families. And the federal government is investigating you for that. How could anybody in the city say well, let's buy them a couple tickets? You know, let's send them home so they can be reunited with their family. Then you say we got juvenile confidentiality. Now Joe, where's the common sense here? Come on, man. Get rid of these people before they infect our families, right?

VERONESE: Well, that's what we're doing. We're not sending them to other cities and throughout the United States. We're sending them back to Honduras. It's ICE's job to keep them out of the United States, but they keep coming back.

KASICH: Joe...

VERONESE: We have this resolving door.

KASICH: ...if you deport them, they can't come back. You are — look, you're not turning them over to ICE because you don't want them deported. What the city's doing is they're sending them on an airplane ride, and then they're saying they can come back. And frankly, you know, if they come back, that's great. Maybe they can become great productive citizens. I don't want them back. And I don't think you do either, do you?

VERONESE: Well, no. Well, I agree with you on that point. You know, we're about rehabilitating here. And you're right, there needs to be more cooperation with the federal government on this particular issue.

KASICH: All right, Joe...

VERONESE: There's no criminal intent here.

KASICH: I appreciate you coming that way. Why don't you work on it? You got influence out there. We love your city. We want it to be sane again. Joe, thank you.

VERONESE: We welcome you here to San Francisco any time.

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