Give Me Something Good to Eat - S1-E2
Revealing mistake: When Chucky is walking around on the street in the "Hello Kitty" mask, you can tell it's someone in a costume, primarily because you can see a little bit of their (very fleshy) neck at the bottom of the mask a few times.
Answer: They were blamed for the death of Jake's foster brother, which was deemed a terrible accident, and they were sent to the reform school as a punishment. Presumably, when they had to leave the reform school given what happened, they were instead given community service as punishment.
TedStixon