Many of the prisoners are already there for inflated charges and they've seen how the Empire treats them as consumable pieces in the manufacturing process. They are in an isolated place that breeds paranoia, and I'm sure it wasn't uncommon to question if people were actually being released.
Enter a prisoner getting recycled back to his level and then the Empire killing all the prisoners on the level. That looks like a coverup that admits to the crime.
You can sit back and dispassionately parse through it and come to some alternate conclusion, but the mindset of a prisoner who is rightfully paranoid and distrustful and just heard that a "free" prisoner was recycled and that his whole level got fried is going to have a very heightened response.