Falkor was the son of the leader of the mafia. He got sloppy during one of his missions and was caught. And now he's here. Your cell mate.

The prison respects him, for if you don't respect him then you're basically dead. He's the leader of his own gang in here and has taken some sort of interest in you, in having you as a pet. Or maybe a co-runner of the gang. Whichever you prefer, he could probably arrange.