The uncle of a young Vermont girl found dead could face the death penalty on federal kidnapping charges connected with the case, prosecutors said Thursday.

U.S. Attorney Thomas Anderson said Michael Jacques will be charged with kidnapping in connection with the death of his niece, 12-year-old Brooke Bennett.

"Today is a tragic day for Vermont," Anderson said. "Our thoughts and our prayers are with the Bennett family and the people of Randolph, Vt."

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Jacques, 42, is expected to be in federal court some time next week. The kidnapping charge can carry a sentence of death or life in prison. Michael Desautels, the federal public defender representing Jacques, did not immediately return calls Thursday morning.

Officials said autopsy results on Brooke are still pending. The girl, who had just finished seventh grade at Randolph Union High School, disappeared on June 25 after being seen at a convenience store with Jacques.

She was found dead late Wednesday night about a mile from Jacques' home.

The discovery of Brooke's body comes as investigators look into claims that the girl was to be initiated into a sex ring allegedly run by her uncle.

In an affidavit unsealed earlier Wednesday in U.S. District Court in Burlington, Vt., the FBI said a teenager they identified as "Juvenile 1" told investigators she accompanied Jacques on June 25 as he tricked his niece into thinking she was going to a party and took her to his home to be initiated that day into a sex ring.

The girl said she was led to believe Brooke "would have sex with adult males" during the initiation, and that she herself had been forced into the ring.

The affidavit included information about sexually suggestive e-mails with two additional addresses, including one for someone named Ruel Domingo, but Anderson said those e-mails originated from IP addresses at Jacques' home and office.

E-mails accuse Jacques of coercing or enlisting the second girl to participate, including by tying Bennett down if that became necessary.

The girl wrote, "yes. I will help," one e-mail said.

Jacques has been in custody since Sunday on state charges of aggravated sexual assault against a different underage girl. He has pleaded not guilty. Those will be dismissed in lieu of the federal charges, said Vermont Attorney General William Sorrell.

"It will be dismissed without prejudice, meaning it could be brought back, but clearly our main focus investigative-wise and prosecution-wise would be on the kidnapping and the death of Brooke Bennett," Sorrell said.

Officials were tightlipped on the details surrounding Brooke's death during a news conference held Thursday morning.

"This investigation is far from over," Anderson said. "Much work remains to be done, and we will work tirelessly until the investigation is complete."

Officials still do not know how Brooke was killed, and they didn't say much about the alleged sex ring except that it appeared to pose no current threat to young residents in the state.

"There's nothing from this investigation that's been turned up, nor otherwise are federal and state authorities aware of any ongoing efforts to recruit young girls or boys here in Vermont to have sex with adults," Sorrell said. "And you can rest assured that if evidence is uncovered that we feel poses a risk to the public we will be the first to raise alarm bells."

After searching in and around Jacques' home across town for days, police said they found the girl's body in a spot where the earth had been disturbed about a mile from Jacques' home. He is married to the sister of Brooke's mother, Cassandra Gagnon.

"The painful discovery of Brooke's body today is tragic and heartbreaking," State Police Director Col. James Baker said Wednesday. He called the death "clearly suspicious" but declined to give details.

The federal affidavit said that DNA evidence from Brooke's handkerchief confirmed human blood and semen, but the semen did not belong to Jacques.

Investigators believe this may have been planted by Jacques and anyone who might have been helping him "in order to deflect suspicion from themselves and conceal their illegal activities," according to the affidavit.

Officials refused to comment on the evidence listed in the affidavit.

In another blow to the family and town, Brooke's former stepfather, Raymond Gagnon, 40, of San Antonio, Texas, was formally charged Wednesday with obstructing justice in the case. He entered no plea at the federal hearing and was denied bail pending another hearing on Monday.

Click here to read the Gagnon affidavit (FindLaw PDF).

Lawyer John Pacht argued unsuccessfully that Gagnon cooperated with authorities who questioned him in Texas and should be released.

Police say that during their investigation, Jacques led them to a posting on the MySpace social networking site in which Brooke firmed up a planned rendezvous the next morning with someone whose online name was "Skittelmeup."

But forensic analysis showed the posting and reposting soon afterward came from a laptop that Jacques said belonged to his employer, Thermadyne, in Lebanon, N.H., according to the affidavit.

It said Gagnon told authorities he accessed the account, using login information from Jacques, from his laptop in San Antonio the night Brooke disappeared. He then downloaded child pornography onto the laptop, which police have not recovered, according to the affidavit.

About 300 people attending a candlelight vigil Wednesday night found themselves mourning the news that her body had been found a few hours earlier.

"Brooke Marie, I love you so much," her mother said near a large photo of Brooke on the town gazebo in the picturesque town of just over 5,000. "I just ask that justice be done for the person who took my baby away," she said, sobbing.

Gary Finch, Brooke's homeroom and math teacher last year, spoke at the vigil. He said she was an energetic and enthusiastic learner whom he loved having in class.

"She was always volunteering, always with a smile on her face. Smart, creative. It's a tragedy. It's unbelievable. It's hard to comprehend. I didn't think anything like this would happen to such a great kid."

Finch said when school started last fall, Brooke was nervous about transferring from her small elementary school to the high school.

"She conquered that," he said. "She didn't conquer this."

Click here for more on this story from MyFOXBoston.com.

Click here for more from FOX 44 in Burlington, Vt.

The Associated Press contributed to this report.