My degrees are in criminology administration and I often work in security and public safety. I know that Ayn Rand wrote (or said) very little about this. She deflected questions about capital punishment, saying only that it is a technical issue in jurisprudence. In a video recording interview (or chat) with her lawyer, Henry Mark Holzer, she pointed to ancient Rome as an example of "objective law." She underscored the fact that the Romans were not advocates of individual rights, but that the laws were publicly known and uniformly enforced. That made them "objective." For Rand, the injustice of totalitarianism was not the harsh laws, but (1) the fact that the laws are self-contradictory and therefore capricious and (2) the fact that pull-peddlers sell exceptions.

Her essay, "America's Persecuted Minority: Big Business" and Alan Greenspan's essay, "Anti-Trust" probably best frame her ideas on criminal justice.

That all being as it may, I do find this, from the National Institute of Justice to be fully consistent with Objectivism:

"The research team theorizes that although offender services and programs may have a direct effect on desistance, individuals must decide independently to transform themselves into ex-offenders. Programs and services may facilitate transformation, just as individual transformation — or the lack thereof — may moderate the effects of re-entry assistance."
http://www.nij.gov/topics/corrections...

For two years, I served on a city-county citizens' advisory board on community corrections. One program that did have marked success was "Moral Reconation (sic) Therapy." (http://www.moral-reconation-therapy.c...) It depends on self-awareness and self-identification. Generally speaking, criminals have no selves. That's the problem. It explains the lack of empathy for their victims, and their inability to change their behavior. Offenders who discover themselves seldom re-offend.

One of my professors said that spending $100,000 for a year of professional psychological counseling for an offender is the cheapest solution to the problem. It sounds like coddling. So, it is impossible to sell to law-makers who get elected by being "tough on crime." But crucification, drawing and quartering, flogging, and imprisonment all have failed.

(One exception to all of that is white collar crime. White collar criminals are planfully competent, educated, intelligent, calculating rational actors. The best way to deal with them is with financial and social controls, and financial and social remediations.)