A loan requires the signature of the plan's trustee -- who is likely to be the CEO of the company.
I am the trustee of my own company's 401(k) plan, and I have to sign twice if I take a loan from the plan: once as the account holder (the "employee") and once as the trustee.
Nothing can happen fast and I’m betting these people paid bills and spent money on an account they thought was good, then the bank tells them The paycheck bounced and suddenly so does other checks they wrote. Then comes penalty charges by stores and creditors. When I said sucks I should have used all caps. Very difficult for a family.