What you call "incestuous" I call smart business practices. Instead of shouldering the burdens of healthcare costs, payroll taxes, liability insurance, etc, WLAN smartly set up a reseller in which the staff takes on those responsibilities themselves as independent contractors.
What your describing is a related party transaction. The transaction still must be an "arms length tranaction". Basically you cannot structure transactions between related parties as your describing. It violates US tax code for one. I am not sure but I would think shareholders would also have some recourse. Look up arms length transaction and related party transaction.
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