If the Empire was trying to trick a group of people into being prisoners for life, I imagine that pretending to release them only to give them a new sentence would only work once. Maybe the prisoners are ‘released’ only to be transported to the neighboring prison building for the remainder of their life sentences, and one prisoner was accidentally placed back in the same building in a different level, at which point the game was up.
But wouldn’t they just be like “…hey I was supposed to be released!” to their new team, and then we end up with the same problem?
I’m imagining that there are two prison systems, one for prisoners who believe that they are working out a temporary sentence and one for prisoners who know that they are in for life. Whenever prisoners complete their sentence in the first system they are transferred to the second system (perhaps in a different building altogether) and so everyone there knows that they have been lied to and they are in for life.
This gets screwed up if someone who was supposed to be released is placed back into the first prison system instead of going to the second, which may be what has happened with the prisoner on Level 2.