I believe it's in old Russian azbuka, second letter is yat "Ѣ", pronounced as "ie", or "e", we don't use it anymore.

It's even not the matter of belief, it's an absolute truth. The letter is "yat'" and it did function the way you said. It was abolished by the reform of Russian spelling in 1918 but had persisted for long among Russian emigration outside USSR untill the end of WW2.