American singer and actress Selena Gomez has rejected fraud allegations brought against her by investors who claim they lost nearly $1.2m after investing in Wondermind, a mental health company she co-founded with her mother.

The investors allege that Gomez failed to properly support and promote the company despite being presented as a major part of its marketing strategy. They claim they were told the singer and actress would use her large social media following and public profile to help build the business.

Gomez’s lawyer, Matthew Rosengart, has strongly denied the allegations and asked a court to dismiss her from the case.

He described the claims as “threadbare”, “vague, generalised and contradictory”, arguing that Gomez never agreed to manage Wondermind or take on the responsibilities the investors have attributed to her.

“The claims against her are meritless if not frivolous,” Mr Rosengart said.

He also said the legal team was considering further action, including possible sanctions against the investors who brought the claims.

The dispute centres on Wondermind, a mental health platform founded by Gomez, her mother and another co-founder around five years ago. The investors say they were encouraged to put money into the company because of Gomez’s involvement and influence.

According to the allegations, investors believed Gomez would play an active role as the company’s head of marketing.

However, her lawyer maintains that she did not make such commitments and should not have been included in the lawsuit.

The case also puts Gomez’s mother in the spotlight, as she remains involved in the fraud allegations alongside Wondermind and another co-founder.

Crisis public relations expert Lauren Beeching said celebrity-led businesses involving family members can create additional risks because personal relationships and business responsibilities can become difficult to separate.

She said celebrities working with relatives should establish clear responsibilities, independent oversight and formal safeguards in case problems arise.

“A family relationship shouldn’t be a company’s governance structure,” Beeching said.

Despite the legal dispute, Beeching believes the case may have limited long-term consequences for Gomez’s reputation because her core audience may not pay much attention to the allegations.

She said there was an important difference between generating negative headlines and causing lasting reputational damage.

Gomez rose to fame as a Disney Channel star before establishing a successful career in music, acting and television. She has also built a major beauty business and has millions of followers on social media.

The legal dispute comes as Gomez prepares for the release of the sixth series of Only Murders in the Building, in which she stars alongside Steve Martin and Martin Short.

For celebrities who use their personal reputation to promote businesses, Beeching advised them to consider not only what their fame can do for a company, but also how the company’s performance could affect their own reputation. (BBC News)