Selena Gomez Sued For Allegedly Defrauding Investors With Mental Health Startup
Investors in Selena Gomez’s struggling mental health startup, Wondermind, sued Gomez, her mother and the company’s co-founder in federal court Thursday, accusing them of securities fraud for promising initiatives that never materialized without properly communicating with the investors whose money was allegedly “funding the collapse.”
Wondermind SRS 44 and Bespoke Wondermind SPV, limited liability companies who say they invested nearly $1.2 million in Gomez’s startup, filed the lawsuit in Delaware federal court on Thursday, accusing the defendants of multiple counts of fraud and breach of contract.
The plaintiffs said they had invested in the company because they were falsely informed it had the infrastructure necessary to function, including proper leadership, partnerships and advertising deals, alleging these “representations were false.”
The plaintiffs cited a September 2025 article in The Cut, which detailed allegations of company mismanagement and substance abuse by Gomez’s mother, Mandy Teefey, as well as Gomez’s apparent efforts to distance herself from the company amid an alleged rift with her mother.
The plaintiffs’ securities fraud claim alleges the company made multiple misrepresentations, including that Gomez would be “intimately involved” in the company, the level of Pierson’s business acumen, Teefey’s fitness to serve in company leadership and the growth trajectory of the company.
“The partnerships did not exist. The initiatives never materialized. The app was never built. And 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 plaintiffs say in their complaint.
The Wondermind investors say they were repeatedly misled by the company and its founders. They cited a meeting with Pierson in May 2022, and email correspondence the following month, in which she allegedly misrepresented her own business success and said Wondermind had already secured partnerships with JP Morgan and Fidelity, expected to generate $5 million in ad revenue that year alone and had already grown to 150,000 subscribers. Citing those points, Pierson sent the investors a document suggesting the company’s valuation could eventually surpass $4 billion. The suit alleges these were misrepresentations, and that the investors did not learn of issues at Wondermind until Forbes published an article revealing Pierson had exaggerated her success. The investors say they then asked Teefey for an explanation, who alleged Pierson had misappropriated company funds to pay for her New York apartment rent and other personal expenses. The suit notes some of Wondermind’s key plans, including an app, never came to fruition, and alleges the defendants continued to misrepresent the health of the company as recently as April.
All three individual defendants, as well as Wondermind itself, are accused of securities fraud for allegedly misrepresenting the company’s finances, overstating the level of involvement Gomez would have as the company’s “head of marketing” and misrepresenting Teefey’s fitness to lead and Pierson’s business background, while the defendants allegedly knew that company initiatives “did not exist, were not feasible, or were due to be obviated by the Individual Defendants’ use of investor funds for non-business purposes.” Pierson is the sole defendant named in another securities fraud claim, which accuses her of making misstatements to investors about the growth trajectory of the company to encourage them to purchase stock. Pierson alone is also accused of conversion and unjust enrichment, both of which are for allegedly misappropriating investor funds for personal purposes. All defendants are accused of fraudulent inducement of the plaintiffs’ investments, while Wondermind is accused of breach of contract.
Gomez and her co-founders launched Wondermind in 2022, guided by the philosophy that mental health requires daily effort, like physical exercise. The company promised products like a website and app that would feature articles, interviews and advice about mental health. But cracks in the company began to show years later, as Forbes reported in May 2025 the company had run out of cash and failed to pay employees the month prior. Teefey reportedly told employees she had taken out a loan to keep the company afloat, and a company spokesperson told Forbes it had “rectified” the situation while admitting it faced “growing pains.” But days later, Forbes reported Wondermind had laid off nearly two-thirds of its employees. A September 2025 article in The Cut, based on interviews with current and former employees, alleged Teefey displayed “erratic behavior,” with some alleging she was “sometimes intoxicated” at work (Teefey denied this allegation). The article says Teefey knew the company was financially untenable by 2023, and that she and Gomez had poured $8 million of their own money to keep it alive.