NEW YORK—Singer and actor Selena Gomez was sued on Thursday by investors who say popstar committed fraud by failing to fulfill duties to build and promote her mental health start-up.The plaintiffs invested nearly $1.2 million in Wondermind Global, which was launched in 2021 to help users strengthen their “mental fitness,” according to the lawsuit filed in federal court in Delaware.Wondermind launched with Gomez listed as co-founder, “chief impact officer,” and head of marketing, according to the suit. The media platform was designed to give users “easy, doable ways to put your mental fitness first every day,” its website reads, directing visitors to sign up for a newsletter.Five investors said in the lawsuit that they put in $1.2 million in 2022 expecting Gomez, one of the biggest celebrities on social media with more than 500 million followers, to leverage her star power and massive social media following to build up the company.Instead, “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 alleged.They argue that Gomez and other company leaders failed to deliver on promises including creating a mobile app.”Gomez purported to sign a contract obligating her to perform and then ignored it,” the lawsuit said.”There was no legitimate enterprise in the works, much less a lucrative one,” the plaintiffs added, saying that the company failed to meet “even its most basic obligations, such as timely paying its employees and vendors.”The investors also sued Mandy Teefey, Gomez’s mother and co-chief executive officer, and their former business partner, Daniella Pierson. The parties are being sued for securities fraud, common law fraud, breach of contract and other claims. The plaintiffs are seeking to recoup their investments as well as damages and attorney’s fees.The company said it had a $95 million valuation in 2022, when investors were allegedly led to believe there would be corporate partnerships with companies like JPMorgan as well as “advertising deals, celebrity cover stories, and a groundbreaking app,” according to the lawsuit.“The partnerships did not exist. The initiatives never materialized. The app was never built,” the investors alleged.Investors found out about the company’s troubles in an explosive article published by The Cut last year, which reported that the company was burdened by internal power and relationship struggles.The article forms a major basis for the lawsuit. The suit cited The Cut reporting when it said Gomez didn’t fulfill her contractual obligations because of “her long-running personal struggles with her mother.”Gomez, Teefey and Pierson collectively owned almost 90% of the company’s shares, the lawsuit claimed.Teefey told investors that Pierson allegedly used investor funds to help pay her rent in New York City, which came to approximately $60,000 a month, according to the lawsuit. Pierson left Wondermind in 2023.In a statement on Thursday, Pierson said she “denies the allegations against her and welcomes the opportunity to present concrete documentation and financial records that establish the facts.” She also said she never used investor funds for personal expenses.
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