What term describes being held personally responsible for fraud, despite having a protective business structure?

The term that describes being held personally responsible for fraud, despite having a protective business structure, is known as “piercing the veil.” This legal concept allows courts to disregard the limited liability that is typically granted to shareholders and owners of a corporation or LLC when it is used to perpetuate fraud or wrongdoing. When the veil is pierced, the individuals behind the business structure may be held personally accountable for the entity's actions, which defeats the purpose of the protections that limited liability structures provide.

This concept is particularly relevant in cases where there is evidence of fraud, commingling of assets, or inadequate capitalization of the business. Courts will look at the actions and conduct of the owners to determine if they should be held personally liable despite the legal protections offered by their business entity. In contrast, veil immunity, corporate protection, and limited liability refer to the protections provided by corporate structures and are not directly related to personal liability in cases of fraud.