An East Baltimore man accused of torching a neighbor's home in one of the city's deadliest arsons was indicted yesterday on federal charges that could bring the death penalty, the latest instance where local prosecutors have stepped aside to let federal authorities handle the city's worst crimes.

Darrell L. Brooks, 21, was charged in a 10-count indictment with throwing two Molotov cocktails into the rented rowhouse on East Preston Street where Carnell and Angela Dawson lived with their five children. Investigators said the fire was set in retaliation for the Dawsons' efforts to fight drug dealing in their neighborhood.

Brooks was arrested within hours of the early-morning fire Oct. 16 and charged in state court with multiple counts of first-degree murder in the deaths of Angela Dawson and the children, ages 9 to 14. Carnell Dawson Sr. escaped the fire by jumping out a second-story window, but died a week later.

The deaths touched off fresh outrage about Baltimore's struggle against crime and violence and appeared likely to produce a rare death penalty trial in the city courts. But Baltimore State's Attorney Patricia C. Jessamy said yesterday that it made sense for the case to be moved to U.S. District Court in Baltimore, because of her office's limited resources.

"All of the citizens of Baltimore were outraged by this case," she said. "All of us want the best possible outcome."

Brooks could face the federal death penalty on each of seven counts of arson resulting in death. He also is charged with destruction of property, possessing unregistered firearms - the Molotov cocktails, which are considered firearms under federal law - and using the crude firebombs in a violent crime, a charge that can bring a life sentence.

Brooks has faced a string of armed robbery, assault and other charges in state court, dating to at least 1998. State officials have acknowledged that at the time of the fire, Brooks could have been jailed for failing to report to his state probation officer as required under an April conviction for unauthorized use of a motor vehicle.

Racine Winborne, a spokeswoman for the Division of Parole and Probation, said a review of the case had resulted in three employees being disciplined.

Winborne said the review showed that employees had failed to take action against Brooks when he didn't report to his probation agent, and that they failed to perform record checks that would have determined his whereabouts.

Brooks' long history with the criminal justice system fanned concerns that local authorities have not done enough to keep criminals in prison. Jessamy said that was not a factor in the decision to try the arson case in federal court.

She said her office handles hundreds of homicide cases and thousands of nonfatal shootings each year. The result, Jessamy said, is an overburdened system where homicide prosecutors routinely are juggling as many as 15 murder cases at a time.

If her office had sought the death penalty against Brooks, Jessamy said she would have had to assign one assistant to handle virtually no other cases until it was completed.

Jessamy had not determined whether to seek the death penalty in Brooks' case. But she said: "The death penalty should be reserved for the most heinous crimes; you can't get more heinous than this."

At a news conference, U.S. Attorney Thomas M. DiBiagio chided reporters for asking why the case was transferred to federal court, calling the questions "ridiculous."

"If you firebomb a house and kill seven people, if that's not a federal case, then I don't know what is," DiBiagio said. "Seven people were burned alive."

The case joins a growing list of city crimes transferred to federal court - which typically has less lenient juries and harsher punishment - since DiBiagio took office about a year ago. Each decision was made in concert with Jessamy.

Under DiBiagio, the office also has brought charges that could carry the death penalty in two fatal carjacking cases and against leaders of a drug gang in a deadly shooting at a Memorial Day block party last year.

In some cases, federal authorities have offered greater protection for witnesses who otherwise might be reluctant to testify in state court. Police Commissioner Edward T. Norris praised the close working relationship at the news conference, while noting that in the case of the Dawson family witnesses were willing to come forward.

"There was so much community outrage and anger that people stepped up and helped us out," Norris said, adding that he hoped that trend would continue. "Out of something this terrible, maybe something good can be discovered."