Sources: SF Pier 14 suspect used federal agent's gun

SAN FRANCISCO -- Francisco Sanchez pleaded not guilty on Tuesday to fatally shooting a woman on San Francisco's Pier 14.

KGO-TV has learned Sanchez used a gun that belonged to a federal agent. Investigators are looking into how Sanchez got the gun. One source says that the gun may have been stolen from the agent's car.

The 45-year-old admitted in a jailhouse interview that he shot and killed Kate Steinle last Wednesday. The public defender's office is representing Sanchez and says he did not know Steinle and meant her no harm.

EXCLUSIVE VIDEO: Man accused in SF shooting admits to crime

With a translator standing by, Sanchez pleaded not guilty in Spanish. He faces a charge of murder with a gun enhancement. The judge issued a bail of $5 million. Sanchez's next court appearance is July 27.

Outside the courtroom, San Francisco Public Defender Jeff Adachi said the bail was set too high.

"Mr. Sanchez was only in San Francisco for a very short period of time," Adachi said. "He has no convictions in the state of California."

Assistant District Attorney Alex Bastian also spoke to reporters.

"Well, today is about Kate Steinle," he said. "It's about this incredible family that's shown such strength in this incredibly difficult time. It's about bringing justice to that family."

VIDEO: Family of woman killed in SF wants to focus on her life, legacy

In the meantime, San Francisco police are criticizing city policy in the wake of the illegal immigrant's confessed killing. And politics over immigration policy are heating up not only locally, but also nationally.

San Francisco's local policy was questioned in the nation's capital on Tuesday. The chairman of the Senate Homeland Security Committee grilled a senior immigration official, asking how Francisco Sanchez could have been set free.

The 45-year-old has been deported five times and has a long rap sheet, but was released from San Francisco's jail even though federal authorities had asked that he be handed over to them. He is now accused of murdering Kate Steinle at Pier 14 in front of her father.

"Tell me specifically what is preventing us when we have people in this country illegally and they have had seven prior felony convictions, why aren't we able to deport those individuals?" asked Sen. Ron Johnson, R-Wisconsin.

To which ICE Assistant Director Philip Miller answered, "In that particular case, our detainer was not honored."

When asked who didn't honor it, Miller said, "San Francisco Sheriff's Department did not honor our detainer that we lodged."

The city's sanctuary policy means it does not hold people who are here illegally. Local officials are saying federal officials know this and know how to work around it, but that they didn't.

"They know that they should have responded with a court order or federal warrant," said Sheriff Ross Mirkarimi.

Federal officials say it's not feasible that they could do that for their hundreds of thousands of cases. Meanwhile, San Francisco police are distancing themselves from the sanctuary policy with the union issuing this statement about Sanchez:

"If he was where he belonged (Mexico) this innocent victim would still be alive. If this city and some of its elected officials continue with this failed policy, then it will happen again."

They posted the full statement on their Facebook page.

That's what lawmakers in Washington want to prevent.

"So there's another criminal warrant but he was released into general society to create a murder, or commit a murder. I mean, does that make any sense to you? Cause I'll tell you, it doesn't make any sense to the American public," said Johnson.

Steinle's family has set up an online fundraising page to raise money for funeral costs and to collect donations for charities that were important to her. Click here for more information.