Kyle was part of the smuggling ring and alleged target of Division. Nikita and Alex used him to attract Division's attention to Alex. Altough Alex wanted to do this alone, Nikita did not alow it, knowing Alex wouldn't be able to kill him. They pretended to rob a pharmacy he was in (possibly working there). He definitely had some combat training as he managed to skilfully disarm Alex second before Nikita shot him.
As per plan Alex tried to convince everyone it was Ronnie's doing, but Ronnie was already dead by that time and she was to blame. She was arrested and her suicide was falsified by Division and her infiltration could begin.