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My brother is currently dealing with a similar situation with his stepson. It's a long story, but the boy was living with his father, then father's parents, but is now back with the mother and my brother. He's about 5 YOA right now and is showing disturbing signs such as crushing small animals to death. For THAT child, no amount of spankings has seemed to work. No amount of talking as seemed to work. The boy is so hyperactive that you can't talk to him because he simply ignores you and goes on playing until you yank him up and force him to stop and listen. What first peaked my attention to the boy's problems was when the family dog, normally a very skiddish, docile, loving dog that has never even growled at anybody else, began acting aggressively and even biting the boy. She's not aggressive to anyone else, just him, so I had to wonder what he was doing to make her fear him enough to attack him. Later, he killed a pet bird, and some frogs he found near the storage building. It was at that time that we began to worry about what he might do to his younger sister, so he is being seen by a psychologist now, and treated with some sort of ADHD medication. From what I have seen in the last few days, it has helped, but is still a work in progress.

In your situation, the courts may dictate that he see a psychologist, or may not, but I would certainly recommend that he does. Make sure it's a good doctor as well, he has, no doubt, seen one in the institution he is currently in, but that doc is most likely not the best doctor you can find. Talk to your family doctor and get recommendations for a good psychologist and make every effort to get this boy treated. Above all else though, like everyone else has said, the boy needs attention, love and FAIR discipline. Remember that fair in your eyes may not be fair in his eyes. For me, the best thing that worked was for my parents to treat me with respect, and expect the same from me. I think that if you sit him down and explain to him that you will love him regardless of his actions, you will respect him ACCORDING to his actions (how much he respects you), and that he will reap the rewards of good behavior and suffer the consequences of bad behavior, then follow through with those promises, he will improve. Also, when discipline is needed, anticipation is often worse than the punishment itself, my folks liked to talk about teh infraction, talk about why it was not allowed, and talk about the punishment. They would then carry out the punishment, if I resisted, it got worse. Afterwards, they would explain it again, remind me how much they loved me etc. Worked for me, but it may be a tough battle at first because the boy will have to adjust to someone who is able to discipline him the way he needs.