Michigan Man Sentenced to 10 Years for Pop-Up Tech Support Fraud and Online Drug Distribution

The bottom line: tech support fraud and other illegal online businesses often share the same tools for hiding payments, including shell companies and misleading merchant accounts.

Here is what happened

Kalita pleaded guilty to one count of wire fraud conspiracy, one count of conspiracy to import Schedule II and Schedule IV controlled substances, and one count of money laundering conspiracy.

According to court documents, as reported:

The tech support scheme. Kalita and co-conspirators relied on deceptive pop-up screens that falsely told internet users their computers were infected with viruses or otherwise damaged, and directed them to call for technical support. Victims were connected to Kalita's call centers in India and Michigan. There, they were frightened or deceived into buying products and services they did not need.

The drug scheme. Kalita and co-conspirators sold prescription drugs, including opioids and other controlled substances, shipped from suppliers in India and Europe to people in Massachusetts and elsewhere. They received controlled substances from abroad, repackaged them, and distributed them across the United States.

The concealment. To hide the nature of the transactions, they used PayPal and merchant accounts that purported to belong to non-existent consulting companies, health supplement stores, auto parts suppliers, and travel agencies. They created fake travel itineraries and receipts to deceive U.S. credit card processors.

Related cases

According to the report, two alleged co-conspirators remain fugitives. Manish Kumar, a partner in a Mumbai-based prescription drug company and one of Kalita's suppliers, was sentenced in January 2023 to 87 months in prison and a $100,000 fine. Robert Polanco, a co-conspirator in the money laundering scheme, was sentenced to 38 months in prison and three years of supervised release, and was later ordered to pay $216,900 in restitution to fraud victims in June 2023.

Why it matters

Two features of this case matter for businesses.

First, the call centers were not only overseas. According to the report, Kalita operated call centers in both India and Michigan. Domestic operations can be part of these schemes.

Second, the payment concealment was deliberate and specific. Merchant accounts described as consulting firms, supplement stores, auto parts suppliers, and travel agencies, backed by fake itineraries and receipts, were used to deceive card processors. That is the kind of mismatch that merchant underwriting and transaction monitoring are designed to catch.

What this means for you

1. Payment processors should compare a merchant's stated business with its actual websites, phone numbers, and customer complaints.
2. Watch for merchants whose transaction patterns do not match their stated industry.
3. Treat fabricated supporting documents, such as invoices or itineraries, as a reason to end the relationship and report it.
4. Call centers and lead buyers should refuse traffic from pop-ups claiming a computer is infected.

The payment system was the scheme's weak point. Careful underwriting is what exposes it.