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Rationale: 359 S.C. 217, 597 S.E.2D 803 COURT OF APPEALS OF SOUTH CAROLINA Carol HUNTING, as Guardian ad Litem for Catherine L. Hitchcock, Respondent, v. William ELDERS, Samuel Chris Gordon and Elmyer Enterprises, Inc., Defendants of whom William Elders is, Appellant No. 3778. Heard Oct. 8, 2003. Decided April 19, 2004. Rehearing Denied June 25, 2004. Certiorari Granted August 12, 2005. STILWELL, J. : This action was commenced to recover damages sustained by Catherine L. Hitchcock in an accident caused by a drunk driver. Carol Hunting, as guardian ad litem for Hitchcock, brought suit against Chris Gordon as the drunk driver, Elmyer Enterprises, Inc. as the owner and operator of the bar, and William Elders as the alter ego of the corporation. In the first portion of the bifurcated trial, damages of $1.5 million were awarded against Gordon and Elmyer Enterprises. The second phase of the trial, which is the subject of this appeal, resulted in a holding that Elders was the alter ego of Elmyer Enterprises, justifying piercing the corporate veil, thereby holding Elders personally liable for the $1.5 million verdict and the interest which had accrued from the date of the original judgment against the corporation. We affirm. Facts We discern the following facts from the order of the unappealed first phase of the trial. Gordon became intoxicated while at Willie's, a bar operated by Elmyer Enterprises. Gordon was served alcohol despite being obviously intoxicated. After leaving the bar in an intoxicated state, he caused the accident in which Hitchcock was left permanently brain damaged. Hunting was awarded $1.5 million in actual damages against Gordon and Elmyer Enterprises. The jury also awarded $3,000 and $25,000 in punitive damages against Gordon and Elmyer Enterprises respectively. Subsequently, a non-jury trial was held on the issue of whether to pierce the corporate veil of Elmyer Enterprises and hold Elders liable for the judgment as its alter ego. The facts as gleaned from the second trial reveal that Elmyer Enterprises was originally incorporated in 1981 and engaged in the business of selling tires. Elders and another shareholder operated the business until Elders bought out the other shareholder. The business then became inactive for several years. In 1990, Elders opened two bars on property he owned. He originally held the liquor licenses in his own name. In 1993, he reinstated Elmyer Enterprises for the purpose of operating the bars. Each bar was capitalized with $1,000, which was deposited into separate bank accounts. The property and equipment used to operate the bars were leased to Elmyer Enterprises by other businesses formed and owned by Elders.... In December 1993, Elders transferred several shares of stock in Elmyer Enterprises to his wife and niece. He designated his wife as a vice president and his niece as secretary and treasurer. However, his niece testified that she knew nothing about her ownership of shares of stock of Elmyer Enterprises or her selection as an officer of the company.... During the trial, Hunting presented the testimony of Jan Waring-Woods, a forensic accountant, ... she testified Elders siphoned off between $400,000 and $800,000 from the business over a three-year period.... Hunting also presented testimony from John Freeman, a law professor at the University of South Carolina. He testified that in his opinion the company was operated as a facade by Elders. Freeman maintained Elmyer Enterprises was grossly under-capitalized given its purpose of operating bars and considering the inherent risks associated with a business dispensing alcohol. His conclusion was that Elmyer Enterprises had income that was unaccounted for and profit that was not adequately revealed. He further testified that, in his opinion, Elders was the alter ego of Elmyer Enterprises. Elders testified the income was as reported. He claimed detailed records were never kept by the company.... He also argued the business was run as a statutory close corporation and as an S corporation. Therefore, it did not have to meet the normal business formalities and would likely mirror Elders as the majority shareholder. Elders claimed the business met its ongoing financial obligations and therefore was not undercapitalized.... Law/Analysis Elders contends the trial court erred in piercing the corporate veil of Elmyer Enterprises and therefore holding him personally liable for the judgment. We disagree. "At the outset, it is recognized that a corporation is an entity, separate and distinct from its officers and stockholders, and that its debts are not the individual indebtedness of its stockholders." DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 683 (4th Cir.1976).... If any general rule can be laid down, it is that a corporation will be looked upon as a legal entity until sufficient reason to the contrary appears; but when the notion of legal entity is used to protect fraud, justify wrong, or defeat public policy, the law will regard the corporation as an association of persons.... In Sturkie, this court set forth a two-pronged test to be used to determine whether to pierce the corporate veil. "The first part of the test, an eight-factor analysis, looks to observance of the corporate formalities by the dominant shareholders. The second part requires that there be an element of injustice or fundamental unfairness if the acts of the corporation be not regarded as the acts of the individuals." Id. at 457-58, 313 S.E.2d at 318. The first eight factors were delineated in Dumas v. InfoSafe Corp., 320 S.C. 188, 463 S.E.2d 641 (Ct.App.1995): whether the corporation was grossly undercapitalized failure to observe corporate formalities nonpayment of dividends insolvency of the debtor corporation at the time siphoning of funds of the corporation by the dominant stockholder nonfunctioning of other officers or other directors absence of corporate records, and the fact that the corporation was merely a facade for the operations of the dominant stockholder ... The Sturkie factors, which now have less importance, include the failure to observe corporate formalities, nonfunctioning of other officers or other directors, the absence of corporate records, and, as stated above, the nonpayment of dividends. The adoption of the statutory device allowing the creation of a statutory close corporation was designed to lessen the formalities necessary to maintain a corporation.... The failure to observe the formality "is not a ground for imposing personal liability on the shareholders for liabilities of the corporation." S.C.Code Ann. ?? 33-18-250 (1990).... Although Elders maintained a bare minimum of corporate records, normal business records were definitely lacking in sufficiency. The corporation did not have adequate records of income from the video poker machines or from the operation of the bars. It did not have records of cash receipts, cash expenses, sales, inventory, or other profit and loss statements that normally would be expected. In the same fashion, although the corporate minutes indicated the election of officers, Elders's niece, who served as secretary-treasurer, stated she did not know she was an officer in the corporation. Elders produced minutes indicating that his wife and niece were present during meetings. However, the niece testified she never attended any corporate meetings. Admittedly, Elmyer Enterprises was not required to follow the same corporate formalities as a regular business corporation. Although the failure to adhere to these formalities alone cannot be used to pierce the corporate veil, coupling the dearth of corporate business records and the inactivity of other corporate officers with the evidence of substantial siphoning of funds provides evidence upon which the trial court, at least in part, based its decision.... The corporation was originally funded with only $2,000, which represented $1,000 for each of the two operating locations. Elders asserts that the corporation was properly capitalized at all times, even though the capitalization never appeared to increase over time. One fact which all the authorities consider significant in the inquiry, and particularly so in the case of the one-man or closely-held corporation, is whether the corporation was grossly undercapitalized for the purposes of the corporate undertaking. See DeWitt, 540 F.2d at 685.... The corporation's initial funding was minimal at best. However, as an ongoing concern, the corporation was not properly capitalized.... Additionally, as Professor Freeman testified, a corporation established for the purpose of serving alcohol has more inherent risks and should be adequately protected from liability associated with those risks. The failure to properly protect the business and others should be considered when determining whether the corporation is properly capitalized. Accordingly, we hold Elmyer Enterprises failed to remain properly capitalized as an ongoing business. The factors dealing with undercapitalization, siphoning of funds, and whether the corporation was a facade for its dominant shareholder are closely related. The trial court found Elders siphoned substantial funds from the corporation, and the evidence substantiates this finding. Using documents from the corporation, the forensic accountant testified there was a significant amount of income not reported, and she determined that Elders siphoned $400,000 to $800,000 from Elmyer Enterprises over a three-year period.... We therefore agree with the trial court that a sufficient number of the eight Sturkie factors were present to justify moving to the second prong of the analysis. The second prong of the Sturkie test, requiring "that there be an element of injustice or fundamental unfairness if the acts of the corporation be not regarded as the acts of the individuals," Sturkie, 280 S.C. at 457-458, 313 S.E.2d at 318, is perhaps more elusive. In Sturkie, the court stated: The burden of proving fundamental unfairness requires that the plaintiff establish (1) that the defendant was aware of the plaintiff's claim against the corporation, and (2) thereafter, the defendant acted in a self-serving manner with regard to the property of the corporation and in disregard of the plaintiff's claim in the property. Later cases clarified the actual knowledge requirement by stating that a person is "aware" of a claim against the corporation if he has notice of facts which, if pursued with due diligence, would lead to knowledge of the claim. Multimedia Publ'g of South Carolina, Inc. v. Mullins, 314 S.C. 551, 554, 431 S.E.2d 569, 572 (1993). Most recently this court has held that "the essence of the fairness test is simply that an individual businessman cannot be allowed to hide from the normal consequences of carefree entrepreneuring by doing so through a corporate shell." Dumas, 320 S.C. at 193, 463 S.E.2d at 644. There is evidence that indicates Elders knew of the plaintiff's claim against the corporation and that, as the trial court found, he nevertheless acted in a self-serving and unfair manner by siphoning off substantial sums of money, commingling and transferring assets which he held in his own name to different entities, transferring stock in the corporation to other individuals without a valuable consideration, and then finally dissolving the corporation. Elders submits there is no evidence he intended to avoid the normal consequences of his entrepreneurial adventures. However, the "normal" consequences of operating a bar which, at least in this instance, admittedly served alcohol to an already-intoxicated individual, transcends that which would be considered normal consequences for the average entrepreneurial endeavor.... AFFIRMED. Note: The Sturkie test used by the court in this case to find the shareholder was the alter ego of the corporation is just one test that courts may use when deciding whether to pierce the corporate veil.