I'm no legal expert, but wouldn't they be the ones who broke the agreement when they misled you as to what position you were going to be taking?
I would say as long as you have some sort of documentation (email, or anything in print since I doubt you taped your phone conversations) that you should be alright.
What would taking another assignment with them do to change the status of the prison deal? Nothing. Sounds to me like they are just trying to bully you into coming back to them. There are plenty of companies out there that would never resort to these tactics, many of them would definately never deceive you in the first place.
You may want to check into some of the companies advertising on here. I am very familiar with three of them whom I speak with on an almost daily basis and can say that the people you would be working with are exceptional and caring individuals.
Send me a private message if you'd like or shoot me an email at Aaron@ultimatenurse and I will give you the names of those companies and those three ladies that I guarantee would never ever treat you that way.
Man I hate that. There is absolutely no reason for anyone to ever be treated this way. You probably should have left the assignment on the first day as soon as you realized they had misled you.