"The Scorp had an investment in a partnership. This '2nd tier' k-1 (don't know if that is right) distributed cash but it went to him personally."

Have you seen that K-1, so that you can see the EIN for the partner?

What he seems to be overlooking is the reason to form a corporation at all. He isn't honoring the separation, that this S Corp is an independent entity from himself. By piercing the corporate veil, he would be putting himself, personal assets, etc, completely exposed financially and legally.

"The cash distributions didn't go into the top tier S."

Someone provided the Partnership with the identification info of the partner. If/when he signed, he would sign as "John Doe, President of S Corp" instead of John Doe.

That's where you start. Confirm the person or the corporation is the partner. That's what the K-1 will confirm or have an error, as well. Then, if the LLC documents it is supposed to be the corporation, and the K-1 is issued to the person, that would be a nominee interest, and the K-1 belongs to the S Corp and gets entered for the S Corp. The 1040 might also have an entry for it with a full offset to show that it belongs to the 1120S (I have not worked through that type of error). It might be that this person is Personally the partner in the LLC, though. You need them to prove all of this and provide that proof to you. And compare what you find to what he states and how he presents it.

"I asked him why and he said it was a mistake, so not really genuine in my opinion."

At some point, if you catch him not stating what you find out, you have to decide to keep him or throw him back into the gene pool.

"So, that might establish cash paid in 2021."

Clearly, it does. What you don't know yet is the true relationship(s) between all the parties.

"Can this cash paid be treated as wages paid in 2021?"

Once you know who it belongs to, you enter that input accordingly. If it turns out to be the S Corp that is in the partnership, then this is no different than any other distribution he took from the S Corp, because it first is an In; then it is an Out (cash flow).

That includes the use of S Corp resources for personal purposes. Examples I see quite often when looking at their details: having the S Corp pay for fuel, repairs, license, insurance, of the personal vehicle. That would be treated as Employee Advance until they turn in a Mileage report for business proof under An Accountable Plan. Then, the mileage rate credit to that employee can offset the amounts "borrowed" from the S Corp. Or, the personal use of a company-owned vehicle (is taxable through payroll). I've seen Spotify and Sirius radio charged on the company credit card, for the personal use. I've seen Hair Cuts, car wash cards, I've seen, "My crew will mow the lawn and landscape at my dentist's building and he takes care of my kids for free." I've seen a construction firm build the owner's log cabin with crew labor and left over job materials. And meals Mon-Fri + Starbucks every day. They think, if I pay for it from the business, that makes it business write off.

You might roll over that rock and find all sorts of creepy-crawlies.