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Selena Gomez faces allegations of fraud from investors in Wondermind, the mental health startup she co-founded, after the company reportedly faced setbacks last year, including and .

A group of investors in Wondermind this week accusing Gomez of failing to follow through on commitments that persuaded them to back the business. They also name �Ҵdz����’s mother, Mandy Teefey, and business partner Daniella Pierson, founder of pop culture newsletter Newsette, as defendants in the case.

According to the complaint, which the investors filed on Thursday in Delaware District Court, the plaintiffs expected that Gomez would use her enormous public profile and social media reach to help market Wondermind. Gomez is the on Instagram, with about 404 million followers. She has an audience of followers on TikTok. 

The investors believed that �Ҵdz����’s social media platforms would give the young company an immediate marketing advantage and a direct line to a highly engaged audience. 

They argue that �Ҵdz����’s role was central to Wondermind’s appeal. Investors said they understood that much of the startup’s early value rested on her involvement, particularly her ability to promote its mental-health content and future products to followers who already trusted and paid attention to her.

They also allege that Wondermind positioned itself as a mental wellness platform that was exploring products like a “groundbreaking” mobile app. They allege that the company ultimately failed to deliver the products and revenue it had projected. 

“The initiatives never materialized,” the investors allege in the complaint. “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.”

Pierson said in a statement to that she denies the allegations against her and “welcomes the opportunity to present concrete documentation and financial records that establish the facts.”

“To be clear, she has never used investor funds for personal expenses,” the statement read. “Quite the opposite: Daniella invested her own money into the business and did not draw a salary from the company.”

Other allegations

Gomez started Wondermind in 2021 with the intention of focusing on mindfulness and “mental fitness.” The company sought to promote routines to maintain mental health, just like people use gyms to stay physically fit. 

The startup sought outside funding in 2022 at a of $95 million. The suit describes Gomez as the company’s chief impact officer and head of marketing. The investors contend that the venture overstated its prospects, leadership and readiness to build a viable, differentiated mental-health business.

The suit also alleges that Wondermind overstated how far along its business was. Investors claim the company said it had lined up employer partnerships with JPMorgan Chase and Fidelity, while also building revenue through advertising agreements and celebrity-driven cover stories.

According to the investors, they did not learn the extent of Wondermind’s financial and operational problems until a by New York magazine’s The Cut. The complaint says the article portrayed Gomez as disengaged from her responsibilities and attempting to distance herself from the company as its condition worsened.

The investors are seeking to recover their investments, which reports put at , along with damages and legal costs.