Five investors filed a lawsuit in New York against Selena Gomez, Mandy Teefey, and Daniella Pierson seeking to recoup a 1.2 million dollar investment.
The plaintiffs allege securities fraud, common law fraud, and breach of contract, claiming they were misled about Wondermind's success and Gomez's involvement.
Promised initiatives, including corporate partnerships with JPMorgan and a groundbreaking mental fitness application, allegedly never materialised.
Five investors sued popstar Selena Gomez. The legal action, filed on Thursday, also targets her mother Mandy Teefey and former business partner Daniella Pierson over their mental health venture Wondermind.
Selena Gomez mental health startup controversy
The plaintiffs put $1.2mn into the startup in 2022. They expected Gomez to use her celebrity status and huge online following to expand the business, the investors said. The suit alleges securities fraud, common law fraud and breach of contract. The investors seek to recover their capital, damages and legal fees, as reported by CNN.
The venture began in 2021. Gomez acted as co-founder, "chief impact officer" and head of marketing, the lawsuit stated. On its website, the platform offered "easy, doable ways to put your mental fitness first every day" and prompted users to register for a newsletter.
Unfulfilled promises and collapse
The startup projected high returns. Wondermind claimed a $95mn valuation in 2022. Investors expected corporate partnerships with companies like JPMorgan, along with "advertising deals, celebrity cover stories, and a groundbreaking app", the lawsuit stated.
"The partnerships did not exist. The initiatives never materialized. The app was never built," the investors said. The founders stayed silent.
"For three years, while the Company quietly collapsed around them, not one of its founders, officers, or directors said a word to the investors whose money was funding the collapse," the lawsuit stated. Gomez, Teefey and Pierson collectively owned nearly 90% of the company's shares.
Internal strife and allegations
A media report exposed the internal friction. Last year, The Cut reported that Wondermind suffered from deep-seated power struggles and fractured personal relationships among its leadership. These revelations now form a major foundation for the legal complaint.
The lawsuit alleged Gomez failed to meet contractual obligations due to "her long-running personal struggles with her mother" Mandy Teefey. Teefey told investors that Pierson allegedly used company funds to pay her $60,000-a-month rent in New York City before leaving the firm in 2023.
Pierson rejected the accusations. In a statement, she "denies the allegations against her and welcomes the opportunity to present concrete documentation and financial records that establish the facts." She also denied spending investor money on personal costs.
