The Assemi brothers pistachio empire is showing more signs of cracking as a major lender sues the Central California farming operation for $72 million in unpaid loans.
U.S. Bank National Association filed a breach of contract lawsuit in federal court this week — one day after the Fresno County pistachio farmers were hit with a $700 million lawsuit from two other lenders, Prudential Insurance Company of America and PGIM Real Estate Finance.
Both lawsuits are asking a federal judge to appoint a receiver to take possession of the Assemi’s pistachio operation to either run it or liquidate its assets.
The Assemi brothers, Farid, Farshid and Darius, could not be reached for comment Thursday.
But court documents reveal how their once-thriving companies, Maricopa Orchards and Touchstone Pistachio Company, have descended into near financial ruin, despite being one of the largest growers in California with more than 50,000 acres.
Pistachios, Wonderful and the Assemi family
For years, the brothers sold their pistachio and almonds to the Wonderful Growers Cooperative and the Wonderful Almond Cooperative, the dominant processor in the industry. But as the Assemis’ farm operation grew, so did their desire to process their own nuts. By 2018, the Assemis formed the Touchstone Company with the intention of building a mega-sized pistachio processing plant in western Fresno County.
The processing plant never happened. The Wonderful company, Touchstone’s biggest competitor, quashed the plans by suing Fresno County for bypassing the state’s environmental review process and illegally issuing construction permits.
The Assemi brothers were drained of millions of dollars in legal costs, construction costs, and in purchasing equipment for the new plant, according to the lawsuit.
Undeterred, Touchstone bought a plant in Terra Bella in Tulare County to process its own nuts along with those from other growers.
“After purchasing the facility, the Assemis continued their efforts to build a new larger plant in a manner that could be kept secret so that Wonderful would not try and stop it,” the lawsuit states.
U.S. Bank rejects Assemi expansion
The Assemis’ clandestine project is referred to as “Project X” in the lawsuit. In 2022, Touchstone officials approached U.S. Bank asking for permission to enter a “complicated arrangement under which Touchstone would finance the expansion of an existing plant owned by a third party (Dry Ranch), and purchase the facility upon completion.”
U.S. Bank’s senior vice president and senior credit manager rejected the idea. But the Assemis pushed forward by trying to secure a $50 million loan, despite looming challenges.
“The pistachio crop in 2022 was one of the worst in years. Interest rates went up, and the Assemi businesses were heavily leveraged. Covid hit supply chains and increased labor costs. Instead of retrenching, they continued with their aggressive Project X expansion plan,” according to the lawsuit.
Eventually, the project was scrapped as construction took longer and the costs were more than anticipated initially.
“In sum, behind Plaintiff’s back, in violation of the loan agreements and despite Plaintiff’s explicit warning not to do so, the Assemi brothers gambled their companies’, their creditors’ and their own financial futures on Project X — and lost,” according to the lawsuit.
Touchstone and Maricopa company assets
This wouldn’t be the last setback the brothers would face. Realizing they were in financial distress, the Assemis hired an investment banker to sell Touchstone’s and Maricopa’s assets that some in the industry said were valued at $2 billion.
Several letters of intent were received and the highest offer was from a competitor. The lawsuit does not identify the competitor, and the offer was rejected.
The competitor’s proposal would have paid Touchstone’s loans and money owed to outside growers.
“The Assemi brothers resisted a sale to a competitor,” according to the lawsuit.
As the pistachio harvest begins in the central San Joaquin Valley, Maricopa is delivering its 2024 pistachios to other processors.
“Without a supply of nuts from Maricopa or funds with which to buy nuts from third party growers, Touchstone simply has no ability to continue operating. It is vital that a receiver be appointed as soon as possible, to try to salvage whatever going concern value remains, and otherwise to liquidate the assets,” the lawsuit states.
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