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Politics & Policy

Tax-free stock from wealthy individuals helps fuel recall of DA Chesa Boudin

San Francisco District Attorney Chesa Boudin faces a recall election on June 7, 2022. I Photo by Getty Images

Bay Area venture capitalists have poured huge sums of money into the effort to recall San Francisco District Attorney Chesa Boudin—and a select few have taken the unusual route of directly handing over stock to help oust the progressive prosecutor. 

Campaign disclosure forms show that the Neighbors for a Better San Francisco Advocacy committee has raised just over $4 million since November of last year, and nearly a quarter of that money came in the form of just four stock contributions. The high percentage of contributions to the recall made in the form of stocks speaks to the unusual manner in which the Bay Area’s investor class is attacking the first-term district attorney. 

In a two-day span at the end of March and beginning of April, the committee leading the Boudin recall effort received almost $190,000 worth of stock from Topher Conway, a managing partner for venture capital fund SV Angel, and more than $384,000 in stock came from Louise Muhlfield, a former HR executive who has served on a variety of nonprofit boards, according to forms filed late last month with the Secretary of State’s Office. Conway is the son of investor Ron Conway and Muhlfield is the wife of venture capitalist Arthur Patterson.

General partner at SV Angel Topher Conway speaks during day one of TechCrunch Disrupt SF 2015 at Pier 70 on Sept. 21, 2015 in San Francisco. Conway recently gave $190,000 worth of stock to the committee trying to recall District Attorney Chesa Boudin. I Photo by Steve Jennings/Getty Images for TechCrunch

No one has bankrolled the effort to boot Boudin out of office more than William Oberndorf, a billionaire investor. He often supports conservative Republicans and has given more than $600,000 to the recall—roughly half of which came from a stock transfer Oberndorf gave to the recall committee in late November.

Mark Perry, a retired general partner for venture capital firm New Enterprise Associates, gave almost $23,000 in stock to the committee in late January.

Oberndorf declined multiple interview requests through an assistant, and attempts to reach Conway, Muhlfield and Perry were unsuccessful.

It’s unclear which company or companies’ stock was given to support the recall committee, but it was sold off by a Fidelity branch in Larkspur, according to campaign disclosure forms.

There could be a variety of reasons why a person contributes stock to a political campaign instead of the traditional method of a check or cash, said Jim Sutton, an election law attorney in San Francisco. But one reason could be to avoid taxes applied to stock that has grown in value.

“A reason why a contributor may want to give stock rather than cash is because they don’t have to pay capital gains tax on the donation of the stock to the ballot measure committee,” Sutton said.

Stock contributions to candidates are taxable transactions, and the appreciated value of the contributed shares requires the people giving the stock to pay a capital gains tax, Sutton said. But these taxes do not apply to stock contributed directly to ballot initiatives in California, creating what could be a loophole as the recall, known as Proposition H, is essentially a candidate campaign rather than a ballot measure.

“That’s why we’re seeing more wealthy people involved, because they have the money and they’re probably not sure what to do with it,” said Bob Stern, a campaign finance expert and past president for Center for Governmental Studies. “But then they see something, feel strongly about it and they say, ‘Here’s something I could do to influence policy.’”

Boudin has often tried to link Oberndorf and other wealthy funders of the recall to the Republican right. A similar strategy served Gov. Gavin Newsom well in his own recall election last year, although it helped him to have actual candidates running to replace him who identified as Republican.

Oberndorf has given millions to support Senate minority leader Mitch McConnell and other GOP officials, and he has been an active participant in San Francisco’s political and philanthropy scenes.

“The hallmark of the recall campaign has been accepting huge amounts of money from billionaires and trying to hide that money,” said Julie Edwards, a spokesperson for Boudin’s anti-recall campaign. “For months they’ve been trying to sell the idea they are in any way ‘grassroots’ even as they accepted six-figure checks from Republican donors.”

A spokesperson for the recall campaign said they did not know what stock was given to support the recall. But the coalition behind the current effort—a previous attempt to recall Boudin last year failed to gather enough signatures—noted in an email that the recall has more than 1,000 donors, 72% of which are Democrats.

The concerns of recall supporters range from general fear about public safety to alleged mismanagement of cases in the DA’s office and a spike in hate crimes against Asian Americans.

Garry Tan, a venture capitalist in the city who now works as the co-founder of Initialized Capital, has given more than $100,000 to support the recall, but none of that money came as stock. 

Tan said he became involved in the Boudin recall after coming to the conclusion that Boudin is not “doing his best to protect people and ensure those who commit violent crimes are held accountable for victimizing the poor, the disadvantaged and the general public.”

With so many newly wealthy people living and working in the Bay Area, the manner in which money is being moved in the Boudin recall could represent a sea change for future races.

“I think we’re going to see more instances of very wealthy people getting involved in campaigns,” Stern said. “In the past, it was the Koch brothers and George Soros. Now we may be seeing dozens, maybe hundreds of people getting involved in campaigns with large sums of money. They can only buy so many yachts.”

Correction: This story has been updated to reflect Garry Tan is not a billionaire.

Josh Koehn can be reached at