Ralph formed a corporation as a fund manager. He accepted money from his customers, promising to invest it and build cash value for them. Instead, he kept the money for himself to enjoy a lavish lifestyle. The court removed liability protection from his corporate entity because the incorporation had been used to perpetuate fraud. This is an example of

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Piercing the corporate veil is a legal term used when a court removes the liability protection of a corporation and holds its shareholders or owners personally liable for the corporation's actions. In this case, the court removed the liability protection from Ralph's corporation because he used it to perpetuate fraud, which is an example of piercing the corporate veil. Unlimited liability refers to the personal liability of a business owner for the debts and actions of their business. Reciprocation refers to the act of exchanging things with others for mutual benefit. A preemptive right gives an existing shareholder the right to purchase additional shares of a company's stock before it is offered to the public.

Ralph Formed a Corporation as a Fund Manager