This is not a criminal slang (especially just the spelling "раён"), though it has "criminal roots". You can hear many people speak like that - taxi drivers, street sales persons, workers, etc. Most of them are not well-educated, so they do not know the right way to speak. Of course the criminals are also not educated, so when you imagine how criminals speak - they will certanly use incorrect forms of words and language constructs.
As for spelling "раён" sounds exactly as "район", so "ё" is used here to emphasize the incorrectness of the speech, especially in the expression "на раёне" (and most likely the person speaking so will spell it incorrectly).
As for "на" - this preposition is often used in argots instead of "в": "на зоне", "на больнице", "на тюрьме" (see this answer by Quassnoi).