Several Investors Who Backed Selena Gomez's $100 Million Mental Health Startup Are Suing Her For Fraud

Selena Gomez is a singer, actress, producer, and the founder of the enormously successful cosmetics company Rare Beauty. But in 2021, she also co-founded a very different kind of business with her mother, Mandy Teefey, and entrepreneur Daniella Pierson.

The company was called Wondermind, and the idea was to build a "mental fitness" platform offering editorial content, podcasts, digital products, and eventually a mobile app. The startup had one especially valuable asset from day one: Selena Gomez, one of the most famous people on the planet, with hundreds of millions of social-media followers.

In 2022, investors were convinced enough by the pitch to put $5 million into Wondermind at a $95 million pre-money valuation, or roughly $100 million after the investment.

Two investment entities whose members contributed a combined $1.175 million to that round now say they were sold a fantasy.

On August 12, 2026, two entities filed a 48-page federal lawsuit in Delaware against Wondermind, Selena Gomez, Mandy Teefey, and Daniella Pierson. The plaintiffs are seeking to recover their investments and are asserting claims including securities fraud, common-law fraud, breach of contract, and other causes of action. These are allegations contained in a newly filed lawsuit. None of the defendants has been found liable for fraud.

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The $100 Million Pitch

According to the complaint, Wondermind's founders told potential investors that the company could quickly grow into a major mental-health platform spanning media, consumer products, and entertainment.

Selena's participation was allegedly a major part of the sales pitch. The plaintiffs claim they were told she would not merely lend her name to Wondermind, but would actively help build and market the company while leveraging her enormous existing audience.

The lawsuit says Wondermind's 2022 materials envisioned businesses that could ultimately be worth more than $4 billion combined.

The investors now allege that many of the promises supporting those projections never came true.

• Selena's involvement: Investors allegedly were told Gomez would play a significant operating and marketing role, but the plaintiffs claim she ultimately distanced herself from the company.
• Corporate partnerships: The plaintiffs say they were told Wondermind had secured partnerships with major employers including JPMorgan and Fidelity. They allege those partnerships did not exist.
• The Wondermind app: A mobile app was supposed to become a centerpiece of the business. The plaintiffs say it was never launched.
• Advertising and revenue: Investors allegedly were told Wondermind expected millions of dollars in advertising revenue and had multiple revenue-producing initiatives underway.
• Financial disclosures: The plaintiffs accuse Wondermind's leadership of concealing the company's deteriorating financial and operational condition while continuing to give investors optimistic updates.
• Selena's services agreement: The complaint alleges that a consulting or services agreement governing Gomez's work for Wondermind was supposed to be part of the financing, but the plaintiffs say they never received a copy and question whether it was ever executed.

One particularly striking update allegedly came in December 2022. Pierson, with Gomez copied on the email, told an investor that Wondermind had experienced "massive growth," exceeded its one-year goals within six months, and generated $1.7 million in revenue from the newsletter in just five months. The email also claimed several multibillion-dollar funds and banks had approached the company about leading a Series B financing. That Series B never materialized.

Wondermind Falls Apart

By 2025, Wondermind was experiencing serious financial problems. The company missed payroll, struggled to pay vendors, and eventually laid off most of its staff. Teefey reportedly told employees that she had taken out a loan against her home to help keep the company operating.

The lawsuit says investors learned the extent of Wondermind's problems through media reports rather than directly from the company. According to the complaint, they demanded their money back in November 2025.

The complaint also contains a particularly unusual allegation involving Pierson. It says Teefey told investors in 2025 that Pierson had misappropriated company money, including funds allegedly used toward a New York City apartment costing roughly $60,000 per month and other personal expenses. That claim comes from Teefey as described by the plaintiffs and has not been proven.

How Much Did Selena Own?

One detail revealed in the lawsuit is that Selena apparently owned much less of Wondermind than many people may have assumed.

The complaint puts her stake at approximately 16%. Teefey allegedly owned around 32%, while Pierson owned approximately 33%.

At Wondermind's $100 million financing valuation, Selena's stake would therefore have been worth around $16 million on paper.

That figure is important when considering whether Selena Gomez is still a billionaire. Wondermind may have become a major legal and reputational headache, but financially it is tiny compared with Rare Beauty, the cosmetics company responsible for the overwhelming majority of Selena's estimated $1 billion fortune.

For the Wondermind investors, however, the stakes are much more immediate. They put nearly $1.2 million into a company once valued at $100 million, and now they want their money back.