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United States District Court for the Southern District of New York
December 21, 2020, Decided; December 21, 2020, Filed
OPINION AND ORDER
This Court granted an ex parte application of Arida, LLC ("Arida"), Earl Management LTD ("Earl"), Finenergoinvest, LLC ("FEI") and Alexey Grachev (collectively, "Arida" or the "applicants") to take discovery in aid of foreign proceedings in the Russian Federation. 28 U.S.C. § 1782. Arida sought the issuance of subpoenas for documents and/or testimony from Daniel Mishin, June Homes US, Inc., June NY, LLC and June NY 1, LLC (collectively, the "movants"), among others.1
The movants filed a motion to vacate the Order. (Docket # 13.) Extensive briefing followed, through the filing of the movants' sur-sur reply papers and supplemental letter-briefs. Movants argue [*2] that Arida has not satisfied the mandatory criteria of section 1782 because the material sought is not "for use" in a foreign proceeding, and, separately, that the Court should exercise its discretion to deny the application under the four factors set forth by Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65, 124 S. Ct. 2466, 159 L. Ed. 2d 355 (2004).
For the reasons that will be explained, the Court finds that Arida has satisfied the mandatory criteria of section 1782 and the discretionary criteria support the issuance of the subpoenas, but that certain subpoenas are overbroad, intrusive and unduly burdensome. The motion to vacate the Order will therefore be denied, but the subpoenas will be modified.
The applicants are located in Russia and describe themselves as victims of a "multimillion-dollar Ponzi scheme" orchestrated by Vladislav Mishin. The applicants have been parties to proceedings in Russia against Vladislav Mishin and entities that he owned, including civil lawsuits that resulted in the entry of default judgments in their favor and subsequent creditor claims in bankruptcy proceedings.2 The applicants' creditor claims in Russian bankruptcy proceedings remain pending. The applicants state that they are contemplating bringing additional fraud-related claims in Russia. (Docket [*3] # 2 at 15.)
The applicants assert that Vladislav Mishin fraudulently solicited investors, including the applicants, for the purpose of maintaining a Ponzi scheme. (See, e.g., Grachev Dec. ¶¶ 6-15.) As described by Arida, in Russia, participants in auctions for large procurement contracts are required to deposit funds as a precondition to submitting bids. (1st Navasardyan Dec. ¶ 37.) Vladislav Mishin owned companies named Brio Invest and Microcredit Company Brio Finance, LLC, which held themselves out to investors as intermediary financers of short-term loans to contract bidders. (Id. ¶¶ 30-50.) Brio told investors that their payments would be placed into auction participants' accounts and released after the bidding period, during which time investors would earn high interest with a low risk of loss. (Id. ¶¶ 42-44.)
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2020 U.S. Dist. LEXIS 239397 *; 2020 WL 7496355
IN RE APPLICATION OF ARIDA, LLC, EARL MANAGEMENT LTD., FINERGOINVEST, LLC and ALEXY GRACHEV
Subsequent History: Motion denied by, Without prejudice In re Arida, 2020 U.S. Dist. LEXIS 250137 (S.D.N.Y., Dec. 23, 2020)
Motion denied by, Motion denied by, Without prejudice In re Arida, LLC, 2021 U.S. Dist. LEXIS 103648, 2021 WL 2226852 (S.D.N.Y., June 2, 2021)
Stay denied by In re Arida, LLC, 2021 U.S. Dist. LEXIS 134048 (S.D.N.Y., July 19, 2021)
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