Investors allege Selena Gomez misled them about mental health startup

A federal lawsuit has been filed in Delaware against Selena Gomez, her mother Mandy Teffey and co-founder Daniela Pearson and their mental health company Wondermind. Two investment groups that poured nearly 1.2 million into the startup are suing the founders for securities fraud, common law fraud and breach of contract. Now as per the lawsuit investors are asking the court to cancel their investment contracts and order damages. Four allegations in the suit include that she failed to fulfill her contractual duties as head of marketing and abandoned promotion efforts. She promised deliverables which were never created including a mobile app, podcasts, digital publications and advertising deals. Founders falsely represented the company's financial status concealing its collapse for three years and failed to meet basic operational duties like paying employees and vendors on time. Wondermind was co-founded in November 2021 by Gomez, Teffey and Pearson as a platform promoting mental fitness tools. Investors were pitched heavily on Selena Gomez's massive celebrity influence leveraging her 500 plus million social media followers to rapidly scale the business. She was expected to be intimately involved in leading marketing and public relations. Co-founder Daniela Pearson was ousted from Wondermind in January 2023. Following the departure Teffey allegedly claimed to investors that Pearson had mismanaged company funds to pay for personal expenses including $60,000 per month for a New York apartment which drew scrutiny towards the company's finances. Investors have continued their stand that they were kept in the dark about the company's struggles until media reports surfaced in August and September 2021. A Forbes report highlights that Pearson had exaggerated the breach, leadership and financial success of a previous business endeavors as well as key partnerships with financial institutions triggering investor scrutiny and ultimately now the legal action.