The way I see it, there are a few things going on here.
Are they clandestine? Almost certainly yes. The definition of clandestine is operating without a charter from a recognized Grand Lodge. Technically, there COULD be a recognized Grand Lodge out there that has granted a charter similar to traveling military lodges, but I doubt it.
Next, is the comparison to lodges in POW camps. Everyone is saying it is different; no it's not. These were meetings of Masons without a charter because they were being confined against their will and did not have access to regular lodges. The reason for their imprisonment doesn't matter FOR THIS ISSUE.
Now, the issue of convicted felons. I've never done an exhaustive compilation of the standings of every single recognized Grand Lodge and their stance on convicted felons. So let's play it out. IF there was a Grand Lodge that allowed convicted felons, and IF all of the inmates were regular, fully paid up members of that particular Grand Lodge, then I would see this as the same situation as the POW camps. However, those are both highly unlikely. In most jurisdictions, the brothers would be immediately expelled upon conviction meaning that they all would be clandestine.
As some others have mentioned, I have no idea how you could carry out the rituals in prison, although I guess if prison tattoos and gang rape go unnoticed, it's certainly possible.
As a side note, unrelated to the whole prison thing, I've always disliked the contention that we aren't allowed to meet unless it's with the permission of the Grand Lodge. It's basically saying 'you can't talk to your brothers unless Big Brother says so'. Some people criticize us as being a cult, and in this regard, I definitely think they have some basis for their argument.