From a tax perspective, this is not a rare situation.
It is comingling, but the proper entries in the accounting can be made to treat these either as capital paid in and paid out by the shareholder or as a loan from and back to the shareholder.
When you state that "due to a downturn, personal funds were deposited into the business" that seems to be an infusion of additional capital by the shareholder. S corporations can return capital to shareholders without any tax consequence or income reported by the shareholder so long as there has not been a return more than the total invested by the shareholder.
So, there is no problem, for tax purposes, so long as the actual business income and expense is what is accurately and properly reported on the business tax return. If there transactions were not properly reported on the tax return it may be an amended return is needed to make the correction to the proper amounts.
This likely does not rise to the level of treating the corporate accounts as your own to remove the distinction of the corporation being a separate entity if this type of activity is not continual or ongoing. As stated, it is actually not rare for closely held shareholders to have some mingling just as you described.
I really can not comment on who may be culpable, or to what degree, without knowledge of all the facts involved; and that is primarily a discussion to have with all the parties involved to reduce or prevent recurrence in the future. Since there is no significant or lasting harm from inadvertent mingling the issue of culpability is only important to the degree that it can help improve financial management in the future.
Please ask if you need more discussion or clarification of the issues.