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Behind the Mask

When the corporation doesn't protect its owner

This story appears in the March 2006 issue of Entrepreneur. Subscribe »

Suppose a small corporation owes you money, won't pay, and you suspect the corporate form is just a sham to protect the owners from having to pay out of their own pockets. Can you get your money out of the owners?

While it's still fairly rare, courts are sometimes willing to "pierce the corporate veil," holding owners personally liable for the debts of the corporation. Two situations especially smack of fraud or injustice sufficient for a court to disregard the corporate entity.

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