Selena Gomez and mother accused of fraud after ‘collapse’ of mental health startup

Selena Gomez and her mother face a lawsuit accusing them and another co-founder of defrauding investors in the mental health startup.

Wondermind was co-founded in November 2021 by Gomez, her mother Mandy Teefey and Daniella Pierson as a business promoting mental fitness practices and tools.

The lawsuit accuses the company and its founders of falsely representing its infrastructure, leadership and partnerships to investors and concealing the alleged fraud for more than three years.

The complaint claims the founders told investors they would build a Wondermind app, promoted advertising deals and said they had secured celebrity cover stories, but that none came to fruition.

Investors put nearly US$1.2m into the company but allege the founders falsely represented its plans to become profitable.

They say they remained unaware of the alleged problems until two media reports portrayed the company as being in serious disarray.

The federal lawsuit was filed in Delaware by Wondermind SRS 44 LLC and Bespoke Wondermind SPV I LLC, two limited liability companies that invested in the startup.

They accuse the company and the three founders of securities fraud, common law fraud and breach of contract and are seeking rescission of their investments, as well as damages.

Rescission is the legal cancellation of a contract.

The investors say they believed their money would be used to rapidly scale Wondermind and build a range of products, including an app, podcast, editorial publication and other wellness products.

They also believed the company’s value was tied to Gomez’s involvement as a celebrity with a large and loyal fan base.

The lawsuit alleges Wondermind indicated that Gomez would be “intimately involved in the Company” as head of marketing and would take part in publicity.

The investors allege those plans did not materialise.

“Gomez purported to sign a contract obligating her to perform and then ignored it. The partnerships did not exist. The initiatives never materialised. The app was never built,” the lawsuit says.

“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 investors also allege the defendants did not provide timely updates about their investments or the company’s operations unless they were pressed.

The complaint says that in the limited updates they did provide, “they both affirmatively misrepresented the status of the Company’s operations and concealed material information about ongoing issues at the Company”.

The investors claim they were kept in the dark for more than three years.

An August 2025 Forbes article focused on Pierson and examined her previous business record.

According to the lawsuit, investors had been told Pierson was a millionaire executive whose previous business, daily newsletter The Newsette, generated US$40m a year while she was chief executive.

They were also told she had secured partnerships with JPMorgan and Fidelity.

The Forbes report questioned those claims and said Pierson had exaggerated the newsletter’s readership and valuation.

The lawsuit says investors contacted Teefey for an explanation after the article was published.

According to the complaint, she responded that Pierson had allegedly “misappropriated investor funds — including the Plaintiffs’ funds — to fund her lavish lifestyle”, including US$60,000 monthly rent for her New York City apartment and other monthly expenses, before being removed from the company in January 2023.

The lawsuit says Teefey had not previously informed investors about the alleged misuse of funds.

A report published by The Cut on 3 September 2025, based on interviews with current and former employees, alleged the company was falling apart.

“The accounts in the Cut article collectively show that, from the outset, Wondermind had no plan for its future — much less a plan for achieving a multi-billion dollar valuation,” the lawsuit says.

The article alleged that Teefey had a long-running substance abuse problem that affected her ability to run the company, that Gomez sought to distance herself from Wondermind because of a family dispute with Teefey and that Pierson had been removed following a dispute with Teefey, according to the lawsuit.

The complaint claims the article showed the company was “in a state of financial calamity” and that “there was no legitimate enterprise in the works”.

In November 2025, two months after the report, the investors sent the defendants a notice of rescission demanding the return of their funds.

The lawsuit says the defendants did not respond “in substance” but “continued to lull and mislead the plaintiffs”.

After the notice was sent, Teefey allegedly contacted representatives of Bespoke and suggested they should not file a lawsuit because the company had an escrow account that could be used to return their investments.

The complaint says Andrew Resnick of Bespoke sought details of the account and return of the funds, after which “Teefey disappeared”.

“In short, there was no ‘escrow account’ or a plan to return the Plaintiffs’ investments,” the complaint says.

The lawsuit also details several updates that investors allege were misleading or false.

In June 2022, Pierson allegedly told the investors that Wondermind had grown to more than 150,000 subscribers in one month and that she had met executives at other companies about “large advertising deals”.

She also allegedly said she expected to close “at least $5M in ad revenue this year”.

According to the complaint, Pierson said there was interest or confirmation for cover story features involving Camila Cabello, Tim Cook, Elton John, Drake and Megan Thee Stallion, among others.

She also said the company was beginning to build its “online editorial experience” and an ambassador and referral programme, according to the lawsuit.

Pierson is alleged to have suggested the company could eventually be valued at more than US$4bn.

The investors say those representations led them to believe Wondermind had the foundations needed to operate and grow.

According to the lawsuit, the plaintiffs proactively contacted Teefey and Pierson for updates between 2022 and 2025.

“When the Defendants would provide updates — either by email or on a phone call — they concealed the significant operational and financial issues at the Company. Indeed, the Defendants affirmatively misrepresented that the Company was performing well,” the lawsuit says.

Overall, the complaint accuses Wondermind and all defendants of securities fraud, alleging they misrepresented the company’s finances, Gomez’s involvement, Pierson’s business background and Teefey’s fitness to run the company.

They are also accused of common law fraud and equitable fraud.

Pierson is separately accused of securities fraud over alleged misstatements to investors, conversion relating to the alleged wrongful use of investment funds and unjust enrichment.

Wondermind is also accused of breach of contract relating to the use of investor proceeds, failures to satisfy conditions required for rescission and alleged breaches of express representations and warranties.