Pop star Selena Gomez faces a federal fraud lawsuit from investors following the collapse of her mental health startup Wondermind Global.
Five minority shareholders filed the complaint in a Delaware federal court on Thursday to recoup a combined $1.2 million investment.
Wondermind claimed a $95 million valuation, according to the lawsuit, while failing to develop promised revenue streams or a flagship mobile app.
Gomez ignored contractual obligations to market the brand to her audience of more than 500 million followers, the investors allege.
Investors claim her lack of involvement stemmed in part from long-running personal struggles with her mother, Mandy Teefey, who served as co-founder and co-chief executive officer of the business alongside Gomez and Daniella Pierson.
Wondermind raised $5 million during an early-stage financing round in 2022, with high-profile backers including Sequoia Capital, Lightspeed Venture Partners, and a venture fund managed by tennis player Serena Williams.
The suing group includes Brent Saunders, the former chief executive of Allergan (NYSE:AGN). Amongst the allegations, they claim that founders concealed operating, financial and management issues from minority shareholders for three years.
At the same time, citing commentary in media articles, it is claimed that Gomez had made active efforts to distance herself from the struggling enterprise.
Gomez was previously named as the start-up’s chief impact officer and head of marketing.
