Arnold, William, and John are shareholders of Alfa corporation and the 3 members of the board of directors. They form another corporation (Beta Corporation) as the only shareholders and directors of the corporation and Beta corporation purchases a tract of real estate for $50,000.

They then vote as directors of Alfa corporation to have Alfa Corporation purchase the tract of land from Beta Corporation for $175,000. Additionally, Beta Corporation, lends $75,000 to Alfa Corporation at a 10% interest rate.

Explain whether Arnold, William and John are subject to any legal liability.