One of the biggest misconceptions about the corporate form is that it fully shields investors, officers, or employees from liability for their actions. It does not.
Employees remain liable for their own actions, though the corporation may also be liable for its employees actions. (See "detour and frolic" doctrine.)
Officers can be held liable for their decisions in running the corporation. However, officers are usually indemnified (by the corporation) for lawsuits against them if they were properly acting in their capacity as officers.
Investors can be held personally liable for any of the corporation's liabilities if the corporation is "undercapitalized", i.e., it does not hold sufficient liquidable assets or insurance to cover its current predicted exposure to the sum of its liabilities. This usually describes most S-Corps and smaller C-Corps, especially solely-owned corporations.
In our case, the lawyer smoked up a "civil conspiracy" charge, which is a popular method of breaking through corporations. But yeah, same result, different plot.
Employees remain liable for their own actions, though the corporation may also be liable for its employees actions. (See "detour and frolic" doctrine.)
Officers can be held liable for their decisions in running the corporation. However, officers are usually indemnified (by the corporation) for lawsuits against them if they were properly acting in their capacity as officers.
Investors can be held personally liable for any of the corporation's liabilities if the corporation is "undercapitalized", i.e., it does not hold sufficient liquidable assets or insurance to cover its current predicted exposure to the sum of its liabilities. This usually describes most S-Corps and smaller C-Corps, especially solely-owned corporations.