I'm so sorry this happened to your son. He needs to get some counseling to deal with what happened. Here are some possible places where he could start:
Your son needs to look at the above websites, then take that first step that will get him on the road to healing.
In fact, I suggest that you call RAINN to ask for advice on how to deal with your niece. In the meantime, I think that you should keep your distance from her. Once all the facts come out, then you and your son can decide just how to proceed when it comes to her.