See also: "Is there a secure cryptosystem that can be performed mentally?" http://crypto.stackexchange.com/questions/844/is-there-a-sec...
I wonder if imprisoned gang members have access to cell phones, though. They probably do. You could run actual strong crypto even on a J2ME device (or a gaming console, or a programmable calculator, or an MP3 player etc.) and I'm sure there's plenty of people you could hire to write a custom-designed, one-of-a-kind bespoke cryptographic app for a gang.
How many prisoners have free access to pens or pencils?
(Not snarky, I really don't know)
No, they don't. Most countries (including USA, AFAIK) restrict inmates phone communication with the external world.
State prison records show that for the first seven months of
this year, corrections officers have seized 319 cell phones
from inmates [in Ohio's] 28 prisons.
http://www.cleveland.com/metro/index.ssf/2013/08/ohio_prison...