Los Angeles, California - Selena Gomez and her mom, Mandy Teefey, are being accused of defrauding investors in their joint mental health company, Wondermind. What happened?

TMZ claims to have obtained a lawsuit filed by two separate companies, Wondermind SRS 44 LLC and Bespoke Wondermind LLC.

They are each suing Wondermind Global as well as Selena, Mandy, and their former business partner Daniella Pierson for securities fraud and an unspecified amount in damages.

The companies named in the suit claim that the Wizards of Waverly Place star and her mother made false claims about the brand's infrastructure, leadership, and ability to make a profit in order to get over $1 million in investments.

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The lawsuit alleges that Selena's involvement in the project was exaggerated, as were Daniella's past business successes.

"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," investors allege.

According to the litigating parties, they only learned about Wondermind's problems in a September 2025 exposé published by The Cut. The Cut's report claims that the company has struggled to even pay employees or vendors in a timely fashion.

Further, the suing companies claim that further issues were caused by Selena's "abject dereliction of her duties to the company" as well as Mandy's alleged substance abuse and mismanagement – plus an allegedly fraught relationship between mother and daughter.

Mandy has denied claims of substance abuse and mismanagement.

"It's unfortunate that a few disgruntled employees with an ax to grind can spread lies about me and distort the truth. Even more disappointing that the media is willing to amplify their lies," she told TMZ after the publication of the exposé piece.