I know it's not quite the same as the story in this thread but, not long ago, one of my friends found out her kids had been on the rob. A few rubbers and pens from a shop in Accy. She bunged the kids in the car and drove them to the police station.
With her consent they were locked up for half an hour. She told the police not to be softy softy on them, and do what they had to!!! I think that was the best way.
I have always told my kids, if they break the law, I will ring the police.....and I bloody well mean it too. If my kids ever stole anything, and I found out, their feet wouldn't touch the pavement til they had got to the police station. Better to nip it in the bud while young than out of control when they are older.