Selena Gomez’s Wondermind faces fraud lawsuit from investors

Selena Gomez’s mental health startup Wondermind is facing a fraud lawsuit filed by a group of investors who accuse the company, Gomez, her mother and co-CEO Mandy Teefey, and former business partner Daniel Pearson of misleading them about the venture’s financial health and business prospects.

The lawsuit, filed in the United States on Thursday, alleges that the defendants leveraged Gomez’s celebrity profile and large social media following to create confidence in Wondermind’s commercial potential, prompting the investors to commit substantial funds to the company.

Founded in 2021, Wondermind was launched with the stated aim of making mental health support more accessible and practical. Gomez joined the venture as a co-founder and served as its chief impact officer and chief marketing officer, while Teefey was involved in its executive leadership.

The five investors named in the lawsuit say they collectively invested about $1.2 million in the startup. They allege that Wondermind was experiencing financial and organisational difficulties but failed to adequately disclose its condition to investors.

According to the complaint, investors were told in 2022 that the company had a capital base of about $95 million. They were also presented with plans involving partnerships with major corporations, advertising deals and the launch of a new app. The investors allege that most of those plans failed to materialise.

The lawsuit also accuses Pearson of using investor funds for personal expenses. The complaint alleges that as much as $60,000 a month was spent from investor money to cover rent for Pearson’s New York residence.

The investors are seeking the return of their investment, damages and legal costs.

The allegations have not been proven in court. No finding of liability has been made against Gomez, Teefey, Pearson or Wondermind.