Selena Gomez faces fraud lawsuit from investors

US pop star and actress Selena Gomez and her wellness startup Wondermind have been sued by five investors who accuse them of misleading investors about the company’s financial condition and prospects, according to a lawsuit filed in the United States on Thursday.

The investors allege that Gomez’s celebrity status and massive social media following were used to create a misleading impression about Wondermind’s potential for success. Gomez co-founded the mental health-focused startup in 2021 and served as its chief impact officer and chief marketing officer.

According to court documents, the five investors collectively invested $1.2 million in the company, expecting it to grow. They allege that despite Wondermind’s deteriorating financial and organisational condition over nearly three years, they were not informed by the company’s founders, executives or directors.

The lawsuit also names Gomez’s mother and Wondermind co-CEO, Mandy Teefey, and former business partner Daniel Pearce as defendants. They face allegations including securities fraud, statutory fraud and breach of contract.

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

The lawsuit alleges that Wondermind claimed in 2022 to have $95 million in capital and presented investors with plans involving corporate partnerships with companies such as JPMorgan, advertising deals, celebrity cover stories and the launch of a new app.

According to the investors, however, none of those initiatives ultimately materialised.

The plaintiffs further allege that they learned about the company’s internal problems through a report published by The Cut last year.

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Court documents also allege that Gomez, Teefey and Pearce jointly controlled about 90% of Wondermind’s shares. The lawsuit claims Teefey told investors that Pearce had used their money to pay rent for his New York City residence, with the expenditure allegedly amounting to about $60,000 a month. Pearce left the company in 2023.

The allegations against Gomez, Teefey and Pearce have not been proven in court, and the defendants’ responses to the lawsuit were not included in the information provided.