District Judge Adopts Magistrate’s Recommendation in Raykhelson § 1782 Proceeding; Parallel VSMPO Application Remains Pending
In a significant development that extends the VSMPO-Interlink litigation beyond Swiss borders, the United States District Court for the Southern District of New York has granted Section 1782 discovery in the first of two dueling applications for use in Russian criminal proceedings. On June 2, 2026, District Judge Vernon S. Broderick issued an Opinion & Order adopting in full Magistrate Judge Valerie Figueredo’s Report & Recommendation, thereby authorizing subpoenas to sixteen major financial institutions and granting VSMPO-AVISMA Corporation reciprocal discovery of all materials produced to Igor Raykhelson. The parallel, broader application filed by VSMPO (25-MC-444) remains pending before the Court. These U.S. proceedings follow the March 2026 decision by the Cantonal Court of Vaud confirming the revocation of Interlink’s CHF 20.3 million sequestration against PJSC VSMPO-AVISMA Corporation, and underscore the expanding battleground spanning Russian criminal courts, Swiss arbitration, and U.S. federal discovery practice.
Background
VSMPO, headquartered in Verkhnyaya Salda, Russia, is one of the world’s largest producers of titanium. Interlink Metals and Chemicals SA (“Interlink AG”), headquartered in Switzerland, is an international network of titanium distribution companies. Igor Raykhelson (“Igor”), a U.S. citizen, co-founded Interlink in 1991 and serves as its ultimate beneficial owner. His son Joshua Raykhelson (“Joshua”) serves as director of the U.S.-based Interlink entity and resides in Manhattan.
As previously reported, the parties entered into a Swiss law-governed Settlement Agreement on September 30, 2020, intended to comprehensively resolve prior commercial disputes. The Settlement Agreement included broad mutual releases under Articles 8 and 9, covering all claims relating to prior contracts, pricing, performance, and related matters.
The Russian Criminal Proceedings
The U.S. discovery proceedings arise from a Russian criminal investigation that forms the factual backdrop for the entire dispute. On June 23, 2025, the Investigative Committee of the Sverdlovsk Region initiated criminal proceedings against Igor, former VSMPO general director Mikhail Voevodin (“Voevodin”), and others under Part 4, Article 159 of the Russian Criminal Code, alleging fraud in an especially large amount.
The Russian prosecution’s theory is that beginning in late 2013, Voevodin caused VSMPO to sell approximately 30,000 metric tons of titanium shavings and scrap to Russian intermediary companies, VPR, Promindustria, and TPV, for approximately $21.6 million. Those intermediaries then exported the material to Interlink’s warehouses in Estonia and the Netherlands, where it was allegedly repackaged and relabeled as higher-value “titanium alloy charge material” and resold back to VSMPO for approximately $245 million, causing losses to VSMPO alleged to exceed 4 billion rubles. Voevodin and co-defendant Evgeny Lysenko are currently in Russian custody pending trial. Russian authorities have issued an arrest warrant for Igor and, as of early 2026, initiated proceedings seeking an Interpol Red Notice against him.
The Russian criminal proceedings were also central to the Swiss sequestration dispute. Interlink had argued before the Cantonal Court of Vaud that VSMPO breached the 2020 Settlement Agreement by failing to prevent or halt the Russian criminal proceedings and related publicity. The Cantonal Court rejected that theory on both procedural and substantive grounds, finding that Interlink failed to establish a plausible damages claim and that the Settlement Agreement’s broad mutual releases foreclosed the underlying claims. Separate Swiss arbitration proceedings, in which both parties have filed competing breach-of-settlement claims before the International Court of Arbitration, remain pending.
The Section 1782 Proceedings
Against this backdrop, both sides filed separate ex parte applications for judicial assistance under 28 U.S.C. § 1782 in the Southern District of New York, each seeking discovery for use in the Russian criminal proceedings. Both applications were referred to Magistrate Judge Valerie Figueredo for a Report and Recommendation.
The Raykhelson Application (25-MC-427)
Igor Raykhelson filed his application on September 26, 2025, seeking subpoenas to sixteen financial institutions, including JPMorgan Chase, Bank of America, Deutsche Bank, HSBC, Citibank, Barclays, and The Clearing House Payments Company, for wire transfer records covering the period from July 2015 through November 2019.
Raykhelson’s defense centers on a company called RegionProm LLC, which Russian prosecutors cite as evidence of inflated pricing. Prosecutors contend that RegionProm sold comparable titanium to VSMPO at lower prices than VPR and TPV. Raykhelson disputes this, contending that RegionProm dealt in retail-grade material rather than aerospace-quality ASTM-standard titanium alloy, and that the two products are not comparable. The banking records he seeks are intended to show that RegionProm never purchased Western Alloy Scrap using U.S. dollars, the currency in which such material exclusively trades, thereby establishing that RegionProm could not have sourced or supplied comparable aerospace-grade material to VSMPO and that the prosecution’s pricing comparison is factually unsound.
VSMPO intervened in the proceeding and moved for reciprocal discovery, seeking copies of any materials Raykhelson receives through the subpoenas. VSMPO did not oppose the underlying Section 1782 application itself.
On May 4, 2026, Magistrate Judge Figueredo issued a thorough 23-page Report & Recommendation recommending that the Section 1782 application be granted, the motion to intervene be denied, and VSMPO’s motion for reciprocal discovery be granted.
Statutory Factors
The magistrate found all three statutory requirements satisfied. The Discovery Targets are found in the Southern District of New York, either through general jurisdiction based on their New York headquarters or through specific jurisdiction arising from their roles in processing U.S. dollar-denominated wire transfers through the CHIPS and Fedwire systems. The discovery is for use in pending Russian criminal proceedings in which Raykhelson has been formally charged. And Raykhelson, as a charged suspect with the right under Russian law to present evidence in his defense, qualifies as an “interested person” under the statute.
Discretionary Intel Factors
All four Intel discretionary factors also weighed in favor of granting the application. The Discovery Targets are not parties to the Russian criminal proceedings, satisfying the first factor. On the second factor, the magistrate found no authoritative proof that Russian courts are generally unreceptive to Section 1782 assistance — consistent with the consensus view among courts in this District. The third factor presented no evidence of circumvention of Russian proof-gathering restrictions. And on the fourth factor, the magistrate found the temporally limited, narrowly focused wire transfer requests not unduly burdensome, particularly where Discovery Targets retain the right to move to quash if specific requests prove problematic.
Reciprocal Discovery and District Court Adoption
On VSMPO’s motion for reciprocal discovery, the magistrate found four of the five applicable discretionary factors favored granting relief: VSMPO seeks precisely the same materials as Raykhelson; it cannot obtain those materials through the Russian proceedings given that Raykhelson is a fugitive from those proceedings and the evidence is located in New York; VSMPO has a substantial interest as the alleged victim of the underlying fraud and as a party with restitution claims in the Russian proceedings; and the motion was timely filed less than two months after Raykhelson’s application. The motion to intervene was denied as duplicative — intervention was unnecessary to achieve the reciprocal discovery relief VSMPO actually sought.
On June 2, 2026, United States District Judge Vernon S. Broderick issued an Opinion & Order adopting the Report & Recommendation in its entirety. In re Application of Igor Raykhelson, for an Order to Conduct Discovery for Use in Foreign Proceedings, No. 25-MC-427 (VSB)(VF), 2026 WL 1557883 (S.D.N.Y. June 2, 2026). Although the R&R expressly provided that the parties had fourteen (14) days (including weekends and holidays) from service of the Report and Recommendation to file any objections, and warned that if a party fails to file timely objections, that party will not be permitted to raise any objections on appeal, neither Applicant nor VSMPO filed an objection or requested additional time to do so. Judge Broderick reviewed Magistrate Judge Figueredo’s detailed and well-reasoned Report & Recommendation for clear error and, after careful review, found none. The Court therefore adopted the Report & Recommendation in its entirety. The Court granted the Application, denied the motion to intervene, granted the motion for reciprocal discovery, and directed the Clerk’s Office to enter judgment in accordance with the Order and close the case.
The VSMPO Application (25-MC-444)
VSMPO filed its own Section 1782 application on October 9, 2025, seeking substantially broader discovery. VSMPO’s subpoenas targeted CHIPS, the Federal Reserve Bank of New York, JPMorgan Chase & Co. and JPMorgan Chase Bank N.A., Morgan Stanley, U.S.-based Interlink Metals & Chemicals Inc. (“Interlink US”), and Joshua Raykhelson. Igor and Interlink AG moved to intervene.
VSMPO’s stated purpose is to document the full financial architecture of the alleged fraud — tracing the flow of funds from VSMPO through Russian intermediaries, into Interlink’s European operations, and ultimately into accounts associated with Igor and his family — and to support VSMPO’s restitution claims within the Russian criminal proceedings. The nine subpoenas collectively seek wire transfer records, account documents, internal bank communications, transaction logs, beneficial ownership information, 18 categories of documents from Interlink US and Joshua, and deposition testimony from Joshua and Interlink US’s corporate representative, covering 51 named individuals and entities over a 12-year period beginning in October 2013.
On May 26, 2026, Magistrate Judge Figueredo issued a Report & Recommendation recommending that the Section 1782 application be granted and the motion to intervene be granted.
Statutory Factors
As with the Raykhelson application, all three statutory requirements were satisfied. None of the Discovery Targets disputed that they are found in this District. VSMPO, as the alleged victim of the fraud with the right under Russian law to submit evidence and seek restitution in the criminal proceedings, qualifies as an “interested person.” And VSMPO made the necessary de minimis showing that the sought-after discovery would be for use in the pending Russian criminal proceedings.
The Intervenors’ Objections
Igor, Interlink AG, Interlink US, and Joshua raised numerous objections — all of which the magistrate rejected.
Pretext for Swiss Arbitration: The intervenors argued that VSMPO’s application was a pretext to obtain evidence for use in the pending Swiss arbitration proceedings rather than the Russian criminal proceedings. The magistrate found that VSMPO had adequately explained the relevance of each category of sought-after materials to the Russian proceedings and that even if the materials might also be usable in the Swiss arbitration, that did not preclude relief where the statutory requirements for the Russian proceedings were otherwise satisfied.
Russian Law and MLAT Restrictions: The intervenors also argued, relying on declarations from Russian counsel, that Russian law, including the 1999 MLAT treaty with the United States, prohibits private entities such as VSMPO from seeking foreign judicial assistance for use in criminal proceedings, and that only the General Prosecutor’s Office may do so. The magistrate rejected this argument on multiple grounds, including that Section 1782 expressly permits applications by private “interested persons,” that the availability of MLAT procedures does not preclude Section 1782 relief, and that if the intervenors’ interpretation of Russian law were correct, it would equally bar Raykhelson’s own Section 1782 application. This result underscored the argument’s internal inconsistency.
Article 51 Constitutional Privilege: The intervenors argued that compelling Joshua’s deposition violated Article 51 of the Russian Constitution, which protects close relatives from being compelled to testify against one another. The magistrate found no authoritative proof from a Russian judicial, executive, or legislative source establishing Article 51 as a bar to Section 1782 relief, and declined to resolve the competing expert declarations on Russian constitutional law.
Settlement Agreement Confidentiality: Finally, the intervenors contended that VSMPO was prohibited from seeking documents in support of criminal proceedings under the confidentiality and “Criminal Allegations” provisions of the 2020 Settlement Agreement, and that VSMPO’s failure to disclose the settlement to the court reflected a lack of candor. The magistrate rejected both contentions — noting that the confidentiality provision itself required VSMPO to refrain from disclosing the settlement’s existence, and that whether the settlement was breached is a question pending before the Swiss arbitration tribunals, not a basis for denying Section 1782 relief. The third Intel factor, the court noted, concerns circumvention of policies of a foreign country or the United States, not contractual obligations under a private settlement agreement.
Scope and Tailoring
On the fourth Intel factor, of whether the requests were unduly burdensome, the magistrate acknowledged the breadth of the subpoenas but declined to deny relief on that basis. Consistent with Second Circuit guidance, the court found it far preferable to issue discovery and direct the parties to meet and confer on scope than to deny relief outright. VSMPO was directed to meet and confer with each Discovery Target after service; unresolved disputes are to be submitted to the court. Additionally, following Chase and JPMC’s clarification that JPMorgan Chase & Co. is a holding company that does not provide banking services, the magistrate recommended that any subpoena be directed to JPMorgan Chase Bank N.A. only.
The intervenors were given until June 9, 2026 to file a separate motion for reciprocal discovery if they wished to receive copies of materials produced to VSMPO, with VSMPO’s response due June 23, 2026.
Implications
The Report & Recommendation in the Raykhelson proceeding (25-MC-427) has now been adopted by District Judge Broderick and is a final, appealable order authorizing the requested discovery and reciprocal production to VSMPO. The parallel VSMPO Application (25-MC-444) Report & Recommendation remains subject to further proceedings before Judge Broderick. The intervenors’ deadline to file a motion for reciprocal discovery expired on June 9, 2026, with VSMPO’s response due June 23, 2026; as of this writing on June 24, 2026, no final order has been entered in that matter.
If the VSMPO R&R is likewise adopted (with or without modifications), the two orders together will authorize an extensive round of U.S. discovery that could significantly shape the evidentiary record in the Russian criminal proceedings — and, given the interplay with the pending Swiss arbitration, potentially affect those proceedings as well.
The rulings highlight several recurring themes in cross-border disputes of this nature:
- Section 1782 has become an essential tool in international litigation involving parties with connections to U.S. financial markets, providing access to dollar-denominated wire transfer records held by New York correspondent and clearing banks that are simply unavailable through foreign discovery processes.
- Settlement agreements with broad mutual releases do not insulate parties from parallel criminal investigations or from Section 1782 discovery sought in connection with those investigations, particularly where the criminal proceedings predate or are independent of the settlement.
- Courts will permit both sides of a dispute to seek Section 1782 discovery for use in the same foreign proceedings, and will use reciprocal discovery orders to ensure that neither party obtains an informational advantage through U.S. judicial assistance. The Raykhelson proceeding exemplifies this approach, with VSMPO obtaining reciprocal rights without the need for formal intervention.
- Arguments that a Section 1782 application is a pretext for obtaining evidence in a different forum will generally fail where the applicant can articulate a plausible relevance to the stated foreign proceedings, even if the materials could also serve purposes in related proceedings.
- Objections grounded in foreign law, whether Russian constitutional privilege or treaty-based restrictions on private parties, face a high bar in the absence of authoritative judicial, executive, or legislative declarations from the relevant foreign jurisdiction.
Counsel
In the ICC arbitration and related international cross-border matters, VSMPO is represented by Wilk Auslander LLP, together with White & Case SA as co-counsel. Counsel for Igor Raykhelson and the Interlink entities in the U.S. proceedings include attorneys whose submissions are reflected in the court record.
