I think that only applies if you do something illegal. What will probably happen is that they'll get sued, and as part of the settlement the company will be forced to pay out $_ million. Since the company probably won't have that, they'll end up declaring bankruptcy.

But then again I'm no lawyer

Only if they act illegally or irresponsibly, right? Otherwise only assets of the corporation are at risk.

holding customer funds without complying with banking laws is a federal crime - making them liable personally

you should tell paypal about that

paypal is a registered bank

Not in the US it isn't.

Not unless fraud is proven. Unfortunately, bad management is not punishable,