HORNSWAGGLED

The Newsletter Sea Tow Doesn't Want You to Read

S P E C I A L I N V E S T I G A T I V E I S S U E

Case No. 2:20-cv-02877-WFK-SIL · Eastern District of New York · February 2026

The Stein File: 37 Years of Sanctionable Conduct

A documented history of the attorney Sea Tow trusts to protect its franchise empire

The rain tapped against the window of a Long Island law office. Inside, a man who styles himself the "King of IP" — email: mitch@kingofip.com — has spent four decades exploring sanctionable conduct. The courts have weighed in. The record speaks for itself.

This is the story of Mitchell A. Stein, Esq. — NY Bar No. 30,978, principal of Stein Law, P.C. (currently at 700 Hummel Avenue, Southold, NY 11971, per recent court filings), and General Counsel to Sea Tow Services International since approximately 1985. It is told entirely through public court records, federal filings, and the words of the judges who have sanctioned him.

37 Years Of Documented Sanctions And Misconduct (1988-2025)

ACT I — 1988

The First Sanction

Alkoff v. Gold, S.D.N.Y.

The earliest documented sanction against Mitchell Stein arrives in 1988 in the Southern District of New York. In Alkoff v. Gold, the court imposed sanctions for what it termed "unreasonable conduct" in filing a baseless motion. It was a beginning — though at the time, no one could have known it was merely the opening chapter.

Every career has a first act. For some attorneys, a sanction is a cautionary tale that changes behavior. For others, it's a rehearsal.

ACT II — 2000

The Lion Sleeps Tonight

Margo v. Weiss, 213 F.3d 55 (2d Cir. 2000)

The case concerned the authorship of one of the most recognizable songs in American popular music — "The Lion Sleeps Tonight." Stein represented clients who claimed authorship rights. The problem was not the claim itself, but how it was prosecuted.

The clients submitted false affidavits. Stein then filed materials in court that directly contradicted his own clients' earlier sworn testimony. The Second Circuit affirmed sanctions against both Stein and co-counsel Stephen J. King.

The Second Circuit affirmed sanctions against Stein for filing materials that contradicted his clients' earlier testimony — establishing a pattern of submitting contradictory evidence that would echo across decades. — Margo v. Weiss, 213 F.3d 55 (2d Cir. 2000)

When your clients swear one thing and you file another, the courts tend to notice. The Second Circuit noticed. It would not be the last court to do so.

ACT III — 2008

"He Has Not Learned His Lesson"

Libaire v. Kaplan, E.D.N.Y. (2008-2009)

This is not the first time [Stein] has flouted his professional obligations and engaged in sanctionable behavior. It is clear that Stein has not "learned his lesson" from these prior impositions. — Magistrate Judge E. Thomas Boyle, E.D.N.Y.

Judge Denis R. Hurley adopted the findings and imposed the sanctions — $94,854. Stein's response to the judicial reasoning? He characterized it as "Machiavellian logic."

When a federal judge tells you — in a published opinion — that you have not learned your lesson, most attorneys recalibrate. Stein called the judge Machiavellian. The file grew thicker.

1988: Alkoff v. Gold. 2000: Margo v. Weiss. 2008: Libaire v. Kaplan — $94,854.

ACT IV — 1999-2017

Fraud on the USPTO

Sea Tow's Yellow Boat Trademark — Cancelled

This chapter requires close attention, because it involves Stein making false sworn declarations to the United States Patent and Trademark Office — declarations that were then used to deceive a Florida state court.

Sea Tow held Registration No. 3678375 for the color yellow as applied to its marine towing vessels. To maintain and strengthen this registration, certain declarations must be filed under 15 U.S.C. §§1058 and 1065.

On December 10, 1999, Stein prepared declarations signed by Sea Tow CEO Joseph Frohnhoefer II stating that "no proceeding involving said rights pending" before any tribunal.

THE PROBLEM

At the time Stein prepared these declarations, the case Offshore Marine Towing v. Sea Tow (Fla. Cir. Ct. 96-11414(13)) had been pending since 1996. Stein was lead counsel in that very case.

The declaration stated no proceeding was pending. A proceeding was pending. The attorney who prepared the declaration was litigating the proceeding. These facts are not in dispute.

It gets worse. On October 6, 1999 — just two months before the false declarations were filed — Frohnhoefer II gave deposition testimony in the Florida case stating the marks were "incontestable at this point since they have gone past the statute of limitations."

This was circular fraud: Stein filed false declarations to obtain incontestable status, then advised the Florida court that the marks were incontestable based on the fraudulently obtained status. The Florida court granted Sea Tow's motion for temporary injunction — relying on a legal status obtained through false statements.

THE CIRCULAR FRAUD

Step 1: File declaration stating "no proceeding pending" (false — Stein was lead counsel in a pending proceeding). Step 2: Obtain incontestable status based on false declaration. Step 3: Tell Florida court the marks are incontestable.

The story ends at the Trademark Trial and Appeal Board. In Smith Mountain Lake Marine v. Sea Tow, Cancellation No. 92059856, after four sanctions orders for discovery misconduct, the Board cancelled the registration on September 29, 2017, finding "any sanction short of judgment would be futile."

ACT V — 2019-2020

The Tampa Bay File

Tampa Bay Marine v. Stein, Bankr. M.D. Fla. 8:20-ap-00518-CED

Per the adversary complaint: Stein represented TBM as a franchisee while serving as STSI's General Counsel, then switched sides without informed consent and represented STSI adverse to the same former client. The complaint alleges Stein neither obtained informed consent "before undertaking the adverse representation" nor did he "communicate adequate information and explanation to TBM about the material risks of, and reasonably available alternatives to, the proposed course of conduct."

Acting on behalf of STSI, Stein advised TBM that it had breached the Franchise Agreement and STSI began withholding all Member Funds from TBM. The Morenos procured two potential buyers, both of whom Stein and STSI rejected. The Morenos were forced to personally refinance their house to attempt to stay current on their Synovus loan.

The TARA. In late October 2019, Stein drafted the "Termination and Relinquishment Agreement" on behalf of STSI. Paragraph 1 contained what the complaint calls a "false acknowledgement": that the "Franchise Agreement terminated on May 11, 2019 upon TBMT's incurable and terminal breach." As the complaint explains: "The Franchise Agreement itself did not terminate; only the rights under that agreement terminated." This distinction is critical in bankruptcy law — a debtor's rights to assume pre-petition obligations depend on whether the underlying agreement still exists.

The Financial Extraction — Per The Complaint

On or about October 28, 2019: TBM paid Stein $25,000 for drafting the TARA — a non-negotiable fee. (Complaint ¶71; Invoice filed as Exhibit B under seal.) On or about November 11, 2019: TBM paid Stein another $25,000 for drafting the Management Agreement — the agreement by which STSI assigned franchise rights to Tampa Bay Marine Recovery, Inc. ("TBMR") to run TBM's former business. (Complaint ¶72; Agreement filed as Exhibit C under seal.)

Both payments — $50,000 total — were made within one year of TBM's petition date, forming the basis of the fraudulent transfer claims under 11 U.S.C. §§548 and 550. Per the complaint, TBM "received less than the reasonably equivalent value in exchange" and "was insolvent on the date of these transfers or as a result of these transfers."

Stein also failed to disclose a critical exception: Section 16.7's "Offer of Compromise," which could have prevented the termination entirely. The complaint states Stein "failed to advise TBM of a critical exception to termination under the Franchise Agreement."

As the complaint concludes: "STSI's withholding of Member Funds crippled TBM and is the proximate cause of TBM's ultimate filing for bankruptcy" on February 19, 2020.

The bankruptcy proceedings generated two adversary complaints against Stein and Stein Law, P.C. — the original complaint filed September 25, 2020 (Doc 1, four counts), and the First Amended Complaint filed November 11, 2020 (Doc 19, expanding to nine counts):

Count I: Legal Malpractice / Professional Negligence. Count II: Fraudulent Misrepresentation. Count III: Negligent Misrepresentation. Count IV: Fraudulent Transfers ($50,000 in fees within one year of bankruptcy). Count V: Breach of Fiduciary Duty. Count VI: Conspiracy (with Sea Tow). Count VII: Accounting (for withheld member funds). Count VIII: Vicarious Liability (Stein Law, P.C.). Count IX: Aiding and Abetting Fraudulent Transfer.

On May 26, 2020, Stein filed a motion for pro hac vice admission in the bankruptcy case. The very next day — May 27, 2020 — TBM filed a motion to disqualify Stein based on his conflict of interest. On June 12, 2020, Stein withdrew his pro hac vice motion without prejudice — quietly stepping back from the very case his conflicts had helped create.

So by the time TBM filed for Chapter 11 on February 19, 2020, STSI had seen to it that the company had no revenue source, no franchise, and no business to reorganize. The whole point of Chapter 11 is to reorganize a business as a going concern — to restructure debts and come out the other side operational. But TBM's business had been taken from it. STSI had already transferred the franchise operations to TBMR, and per the complaint, STSI was demanding that TBMR pay a new $725,000 franchise fee to remain as the operator (Doc 19, ¶38). There was nothing left to reorganize around. A Chapter 11 debtor with no franchise, no revenue stream, and no realistic path to resuming operations is a case that courts routinely dismiss.

The Tampa Bay file tells you everything you need to know about what happens when Sea Tow's General Counsel represents a franchisee. He represented them. He advised them. He switched sides. He charged the franchisee $50,000 in fees for documents that served STSI's interests. The franchisee's member funds were withheld. The Morenos refinanced their house. The franchisee went bankrupt. A nine-count adversary complaint named Stein personally. And then the whole thing quietly disappeared when the bankruptcy was dismissed.

Let's unpack this because it's complicated. "Chaos Law" is a style of practice designed to keep things complicated and Stein is the King of IP . . . No, No, No, the King of Kaos Law.

So, to recap: On November 16, 2020, the bankruptcy court held a hearing and decided to dismiss the underlying Chapter 11 case itself — meaning TBM's bankruptcy reorganization was over. When a bankruptcy case gets dismissed, the adversary proceedings filed inside it generally get dismissed too, because the bankruptcy court's jurisdiction depends on the existence of the bankruptcy case. That's exactly what happened — Chief Bankruptcy Judge Caryl E. Delano entered the dismissal order on December 7, 2020 (Doc 26).

TBM tried to save the adversary claims. They filed a Limited Motion to Reconsider (Doc 24), asking the court to either keep jurisdiction over the adversary against Stein or transfer it to the federal district court. Judge Delano denied this, reasoning that the litigation was still in a "very preliminary stage" — only three pleadings had been filed, no discovery had been conducted — and that the claims were "primarily professional negligence claims" under state law that "could more appropriately be litigated in another forum."

Here's what this means practically: The nine counts against Stein were never tested on the merits. No court ever ruled that the claims lacked merit. The court simply said: I no longer have jurisdiction because the bankruptcy is done, and I'm not going to make an exception to keep this one going. TBM retained the right to refile every single claim — legal malpractice, fraudulent misrepresentation, breach of fiduciary duty, conspiracy, fraudulent transfers, all nine counts — in either Florida state court or federal district court. That's what it means when a dismissal is without prejudice.

Why does this matter for the Stein exposé? When people hear "the case was dismissed," the natural assumption is "the claims were rejected." That's not what happened here. It's the difference between a judge saying "you lose" and a judge saying "you're in the wrong courtroom." Stein's motion to dismiss (Doc 15) — which argued on the merits that he didn't have a conflict of interest and that preparing the TARA as Sea Tow's agent couldn't constitute fraud — was never ruled on. The bankruptcy dismissal made the motion to dismiss moot before the court reached it.

ACT VI — 2025

The Current Litigation

In the Eastern District of New York, Sea Tow's motion papers claimed the Jaeger "Defendants have not produced any documents concerning or containing a calculation of damages." The Court's finding: "This is untrue."

The Jaegers had in fact produced monthly and yearly profit-and-loss statements, federal and state tax returns, and over 9,000 pages of bates-stamped documents. The Court denied Sea Tow's motion as overbroad, unduly burdensome, disproportionate, time-barred (Sea Tow had missed its August 28, 2023 deadline after receiving five extensions), and an attempted end-run around previously denied discovery.

Calling an adversary a liar in court filings or suggesting that an adversary is gaslighting the Court does not convince the Court that the accusations are true. If anything, they invite suspicion on the accusing attorney. — Magistrate Judge Steven I. Locke, E.D.N.Y. (Dec. 29, 2025)

Note the precision of this judicial language. The court found Sea Tow's representation "untrue" — and in the very same ruling, warned that accusing opponents of dishonesty "invites suspicion on the accusing attorney." The court was not speaking abstractly.

THE STEIN AFFIDAVIT — NOW ON THE RECORD

In related proceedings, Stein submitted a sworn affidavit stating "emphatically that all responsive documents have been produced" and that "nothing has been withheld on the basis of relevance." This affidavit is now part of the permanent record. If evidence later emerges contradicting these sworn representations, the consequences extend beyond the case — to Stein personally.

THE RECORD SPEAKS

A Pattern Across 37 Years

Individual incidents can be dismissed as anomalies. A pattern cannot. The courts have documented the following recurring behaviors across nearly four decades:

False statements to courts and the USPTO — from the 1999 declarations claiming no proceeding was pending (while Stein litigated that very proceeding) to the 2025 motion claiming no documents had been produced (which the court found "untrue"). Discovery misconduct and evasion — from the TTAB's four sanctions orders culminating in cancellation of Sea Tow's trademark, to discovery abuse in the current EDNY litigation. Conflicts of interest — representing TBM as a franchisee while serving as STSI's General Counsel, then switching sides without informed consent and representing STSI adverse to the same former client, as alleged in the nine-count adversary complaint (Case 8:20-ap-00518-CED). Excessive fees charged during conflicted representation — $25,000 for the TARA and $25,000 for the Management Agreement, both paid by the franchisee (TBM) that was being forced out of business, within one year of bankruptcy. Submission of contradictory evidence — from Margo v. Weiss (filing materials contradicting clients' testimony) through the current litigation. Repeated sanctions with no behavioral modification — multiple courts over multiple decades have noted the same patterns, with one judge explicitly stating Stein "has not learned his lesson."

Fair winds and following seas — and keep your powder dry.

SOURCE DOCUMENTATION

All information in this newsletter is drawn from publicly available court filings, published judicial opinions, and official government records: Alkoff v. Gold — S.D.N.Y. (1988). Margo v. Weiss, 213 F.3d 55 (2d Cir. 2000). Libaire v. Kaplan — E.D.N.Y. (2008-2009), Magistrate Judge E. Thomas Boyle; Judge Denis R. Hurley. Smith Mountain Lake Marine v. Sea Tow — TTAB Cancellation No. 92059856 (Sept. 29, 2017). Tampa Bay Marine v. Stein — Bankr. M.D. Fla. 8:20-ap-00518-CED (2020): Original Complaint (Doc 1, Sept. 25, 2020); First Amended Complaint (Doc 19, Nov. 11, 2020); Stein MTD (Doc 15, Oct. 28, 2020); Motion to Reconsider (Doc 24, Nov. 30, 2020). Sea Tow v. Tampa Bay Marine Recovery — E.D.N.Y. 2:20-cv-02877-WFK-SIL (2020-present). Offshore Marine Towing v. Sea Tow — Fla. Cir. Ct. 96-11414(13). Documents are accessible via PACER at pacer.uscourts.gov.