According to a report from CBS Sports, the Buffalo Bills told Fred Jackson they were going to release him this past March, and it got to the point where the running back was on a plane to Pittsburgh for a visit with the Steelers before the deal was called off.
"At that time he drew immediate interest from the Patriots and Steelers, both of whom scheduled visits with him," reports Jason LaCanfora. "Pittsburgh was to be his first stop and the sides had effectively worked out a one-year deal that was agreed to pending Jackson passing a physical (which he would have; he was and is fully healthy). Both sides were very excited about the prospect and Jackson was en route to Pittsburgh when he received word that he was not going to receive his actual release after all."
At the time, it was believed that Bills ownership stepped in to keep Jackson around for his presence in the locker room and the community. He was released following the Bills' third preseason game on August 31.
This could certainly explain why Jackson felt he was lied to. It's easy to envision a scenario where GM Doug Whaley told him to find a new team, then he did, then he was told he wouldn't be released. The March back-and-forth occurred before the selection of rookie Karlos Williams in the draft, a back who impressed during training camp, so it's certainly understandable that plans made then could change. Whaley has taken heat from anonymous sources inside the organization for the handling of the situation.