O'REILLY: In THE "FACTOR Follow-Up" segment tonight, while I was on vacation last week, all heck broke loose over Professor Sami Al-Arian. You may remember THE FACTOR broke the story. He's now become a cause celebre.

My take is that Professor Al-Arian was trying to raise money for terrorist groups while sitting on the campus of a state university. We have letters to prove it. And why should the Florida taxpayer be paying for that?

Mr. Al-Arian appeared on the Donahue program last week in an incredibly softball interview. We respect Phil, but he didn't even ask Al- Arian about the fund-raising letters. I mean, come on.

Joining us now from Tampa is former federal prosecutor John Loftus, who has been following the story.

So even Jeb Bush, the governor of Florida, now says after all this time and evidence that you have, we have, that he should be fired. And basically it comes down to, you know, the guy's raising money for terrorists while on the campus.

But there's a bunch of new stuff here that even make the situation even more damning, correct?

JOHN LOFTUS, FORMER FEDERAL PROSECUTOR: Absolutely. Poor picked-on Professor Al-Arian said he never had any connection with any terrorist group, and he cites the CIA head of counterterrorism, Vince Canistraro, as someone who supports him.

Well, Vince Canistraro, although he was retired from CIA, was put under oath, and he admitted under oath that Sami Al-Arian wasn't just a member of a terrorist group, he was the founder of it.

O'REILLY: Islamic Jihad, Palestinian Islamic Jihad, is that what we're talking about here?

LOFTUS: Oh, absolutely.

O'REILLY: Now, what was the occasion of this former CIA guy being deposed?

LOFTUS: It was a lawsuit filed by a reporter named Steven Emerson (ph) against another reporter named John Sugg (ph), and Mr. Canistraro was identified, I guess, by the Al-Arian forces, and Mr. Sugg is someone that could vouch for Sami's good character.

O'REILLY: Right, that's what...

(CROSSTALK)

O'REILLY: ... he's been saying all along, that the federal authorities have not indicted him, and they've cleared him, and blah blah blah. But you're saying that's not true, they haven't cleared him?

LOFTUS: Absolutely not true. In fact, on July 3, I sent Mr. Canistraro an evidence memo listing all the classified evidence against Sami Al-Arian.

O'REILLY: All right.

LOFTUS: It is staggering.

O'REILLY: But then it comes down to the fact that the government has not done its job, because it's not Al-Arian's fault the government hasn't indicted him. But until THE FACTOR got on this case, as you know, nobody ever heard of him, and he'd say -- he was investigated, and nobody did anything about it. So what's that all about?

LOFTUS: Well, Bill, it looks now that what you did in breaking the Al-Arian story out was very important. What we found out is that the Al- Arian got most of his monies from the Saudis, that's absolutely confirmed, and the same Saudi channels that were funding Al-Arian were funding al Qaeda.

So I've been following this case pretty closely. I filed suit against Sami, and a few month ago invited some of the top lawyers in the country, including Ron Motley (ph), the guy that won all the tobacco litigation in 26 states, and I said, Look at this, here are the charts of all the banks and the charities where the Saudis moved money to Al-Arian, they moved it to al Qaeda.

Why don't you go sue the Saudis? They checked it out, checked with all the experts, and they just filed a trillion dollar lawsuit against the Saudis for funding terrorist groups, naming the same banks and charities in their suit that I did in my Al-Arian suit.

O'REILLY: All right. So we know there's a connection. And again, it's not that Al-Arian's al Qaeda, he's not. He's Islamic Jihad, because he brought the leader of that organization over to teach at the University of South Florida, and then he said to me, flat out, Oh, I didn't know he was a terrorist, which I didn't buy, and I'm sure you don't buy that either.

LOFTUS: Oh, sure, because the Israelis had a spy at the headquarters of Islamic Jihad in Syria, and they found out that Sami narrowly lost the vote to become the number one guy in the world in this terrorist group...

O'REILLY: Right.

LOFTUS: ... and his co-professor...

O'REILLY: But still, the FBI and the United States did not move against Sami Al-Arian, still hasn't. Isn't it...

LOFTUS: Don't blame the FBI.

O'REILLY: No?

LOFTUS: The FBI has been working on the Al-Arian case for 12 years. They've been doing a heroic job. They could never get permission from the federal government to prosecute him, because the negligence involved in the Al-Arian case, the negligence involved in not realizing the Saudis were funding terrorism, that's the big...

O'REILLY: All right. So the attorney...

(CROSSTALK)

O'REILLY: ... general of the United States, Janet Reno, and now Mr. Ashcroft, they're the ones that won't prosecute.

LOFTUS: I think that's true. The attorney that I -- if you have -- know any attorneys whose clients were victims of 9/11, have them call attorney Ron Motley, because he's going to do a better job...

O'REILLY: Yes, OK...

LOFTUS: ... than the attorney general...

O'REILLY: ... but I just want to...

(CROSSTALK)

O'REILLY: ... lay out to the people that politics intrudes in law enforcement all the time. Mr. Loftus, keep us posted, we appreciate it.

(CROSSTALK)

O'REILLY: Plenty more ahead as THE FACTOR moves along this evening. In the wake of the "Nightline" and "Washington Post" criticizing your humble correspondent, we'll renew our debate over the Koran reading at the University of North Carolina, coming up.

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