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James Mattis is linked to a massive corporate fraud and nobody wants to talk about it

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You might be wondering how I got here.

Better let a scandal slide than risk a nuclear war.

Secretary of Defense James Mattis is implicated in one of the largest business scandals of the past decades, described by the Securities and Exchange Commission as an “elaborate, years-long fraud” through which Theranos, led by CEO Elizabeth Holmes and president Ramesh “Sunny” Balwani, “exaggerated or made false statements about the company’s technology, business, and financial performance.”

Basically, their biotech startup was founded on the promise of faster, cheaper, painless blood tests. But their technology was fake.

Mattis not only served on Theranos’s board during some of the years it was perpetrating the fraud after he retired from US military service, but he earlier served as a key advocate of putting the company’s technology (technology that was, to be clear, fake) to use inside the military while he was still serving as a general. Holmes is settling the case, paying a $500,000 fee and accepting various other penalties, while Balwani is fighting it out in court.

Nobody on the board is being directly charged with doing anything. But accepting six-figure checks to serve as a frontman for a con operation is the kind of thing that would normally count as a liability in American politics.

But nobody wants to talk about it. Not just Trump and his co-partisans in Congress; the Democratic Party opposition is also inclined to give Mattis a pass. Everyone in Washington is more or less convinced that his presence in the Pentagon is the only thing standing between us and possible nuclear Armageddon.

It’s an absurd, intolerable situation, but that’s life in America in 2018 — and a perfect illustration of how Trump’s unfitness for office exerts a corrosive influence throughout American life.

James Mattis profited off helping Theranos perpetrate a fraud

Theranos was the kind of story that a lot of people wanted to believe in. A technology startup led by a bright, young Stanford dropout that, unlike so many essentially frivolous apps, was actually going to solve the urgent problem of making health care cheaper and easier to access. The basic problem, as revealed by the Wall Street Journal’s John Carreyrou in an October 2015 exposé, was that the whole thing was a sham.

Theranos’s key technology, called Edison machines, didn’t really work, and Theranos wasn’t actually using them to perform its blood tests, relying instead on older Samsung equipment. Theranos offered lower prices than the competition not because it had an innovative new product, but because it was a money-losing startup burning cash raised from venture capitalists.

This scheme worked because Theranos was deeply tied in with the American political, business, and media establishment — counting former Secretaries of State Henry Kissinger and George Shultz as board members, and maintaining sufficient clout that Hillary Clinton’s campaign was unwise enough to schedule a high-profile fundraiser with Holmes months after the publication of Carreyrou’s exposé.

But perhaps none of these elite supporters was as valuable as Mattis.

As the SEC complaint describes, a main element of the fraud was that “Holmes, and Balwani claimed that Theranos’ products were deployed by the U.S. Department of Defense on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100 million in revenue in 2014.”

Holmes, the SEC alleged, “knew, or was reckless in not knowing, that these statements were false and misleading.” It’s easy to see, however, why investors might be fooled about this because one of the company’s board members, Mattis, joined Theranos in 2013 immediately after retiring from a long career of military service that concluded with a stint leading CENTCOM, the US combatant command that is responsible for, among other things, Afghanistan.

Mattis (who, obviously, has no expertise in medical testing) pushed for the military to use Theranos technology, but it was never actually used because it didn’t work.

Nonetheless, as of December 2015, Mattis was still vouching for the company, telling the Washington Post that he “had quickly seen tremendous potential in the technologies Theranos develops, and I have the greatest respect for the company’s mission and integrity.”

The technology, it is now clear, had no potential, and the company had no integrity.

Nobody has properly questioned Mattis about this

The SEC charges are new.

But by the time Mattis was selected to serve as Trump’s secretary of defense in January 2017, the basic scope of the fraud was already well-known to the public thanks to diligent journalistic work. So was the fact that Mattis was not only earning $150,000 a year for his service on the Theranos board but was also involved in pro-Theranos advocacy while on active military duty.

He duly resigned from Theranos on January 5, 2017 — by which time the company was already commonly described as “embroiled in scandal” by press reports — but, remarkably, the whole affair didn’t come up at his confirmation hearings.

It’s not exactly rare for members of a corporate board of directors to serve as window dressing with no actual involvement in or knowledge of a company’s operations, so the mere fact that the whole company was a giant scam doesn’t necessarily reflect any action on Mattis’s part. That said, at least in theory, directors are supposed to do something, and serving as window dressing for a massive fraud is the kind of thing that normally reflects poorly on a person’s reputation.

What’s more, as Paul Szoldra writes at Task and Purpose, pre-retirement Mattis genuinely seems to have been actively involved in trying to help Theranos bypass the regulatory process:

“I would very much appreciate your help in getting this information corrected with the regulatory agencies,” Holmes wrote in an email to Mattis, also obtained by the Post. “Since this misinformation came from within DoD, it will be invaluable if this information is formally corrected by the right people in DoD.”

The general then forwarded the email chain on and asked, “how do we overcome this new obstacle?”

“I have tried to get this device tested in theater asap, legally and ethically,” Mattis wrote. “This appears to be relatively straight-forward yet we’re a year into this and not yet deployed.”

Yet even with the SEC now throwing the book at the company, nobody in Congress is interested in asking Mattis what, exactly, he knew about Theranos and when. And the worst thing about it is their inclination to treat him with kid gloves makes a lot of sense.

Nobody wants us all to get killed

A longtime concern many people have had about Donald Trump is that while the Silvio Berlusconi era in Italy was mostly funny, putting a temperamental and ignorant man in charge of the mightiest empire the world has ever known risks leading to the deaths of millions of people.

As Sen. Marco Rubio (R-FL) put it during the campaign, it would be unwise to give “the nuclear codes of the United States to an erratic individual.” Rubio eventually endorsed Trump for president, though he pointedly declined to retract that claim.

Nothing Trump has actually done since taking office — from provoking a small diplomatic crisis with Australia to accidentally(?) leaking classified Israeli intelligence to the Russian foreign minister to firing his secretary of state on Twitter — has served to debunk the notion that his decision-making process is impulsive and unsound.

In this context, Mattis is near-universally viewed as an island of stability. Respected by the right for having been fired by President Barack Obama, he is also well-informed and (despite the nickname “Mad Dog”) level-headed. Like most career military officers, he is less cavalier about the risks of war than many civilian hawks, and, generally speaking, almost everyone in Washington sleeps better knowing that he is running the Defense Department.

The Theranos thing is a bad look, but there are plenty of Trump Cabinet corruption scandals to talk about — the Ben Carson one is the funniest — so it’s not like Democrats are lacking for general partisan ammunition. If Mattis comes under pressure, he might quit or get fired, and who knows who Trump might tap to replace him.

Under the circumstances, a softball approach to Mattis seems warranted no matter how rotten the signal that sends to the rest of the military, the business community, and the public about the wisdom of getting mixed up in fraudulent endeavors.

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By 0xFCAF in "Fear and Trembling and the Sickness Unto Death" on MeFi

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I took Susan Simpson's data around the money laundering to provide the $130,000 payment to Stormy Daniels and wrote some code to try out some things.

I filtered the list to all payments to organizations containing TRUMP. There were 466 of them.

Then, for each transaction, I considered whether the amount of that transaction plus any number of the following 10 transactions added up to within $1 of some target amount. This works out to be about 1 million different possible sets of transactions.

Then I tested for different target amounts: $90,000, $100,000, $110,000, $120,000, $130,000, $140,000, $150,000, $160,000, and $170,000.

Here's the output of that program:
Read 31170 lines from trump-campaign-2016-expenditures.txt
466 payments were to Trump properties
Checking for transaction sequences totaling $90000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $100000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $110000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $120000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $130000...
HIT TARGET: Total is 129999.72! Transactions found:
[in ] 10/17/2016 0:00,TRUMP INTERNATIONAL HOTEL LAS VEGAS,TRAVEL: LODGING [AMEX: SB23.2859911],"$18,731.90 ",
[in ] 10/17/2016 0:00,TRUMP INTERNATIONAL HOTEL LAS VEGAS,TRAVEL: LODGING,"$79,043.94 ",
[out] 10/20/2016 0:00,"TRUMP, DONALD J.",IN-KIND: PAYROLL (SEE MEMOS BELOW),"$2,574.43 ",TRUMP
[out] 10/20/2016 0:00,TRUMP TOWER COMMERCIAL LLC,PAYROLL,"$2,574.43 ",
[in ] 10/25/2016 0:00,TRUMP INTERNATIONAL HOTEL,TRAVEL: LODGING [AMEX: SB23.2859906],"$10,248.00 ",
[out] 10/25/2016 0:00,TRUMP INTERNATIONAL HOTEL,TRAVEL: LODGING [AMEX: SB23.2859906],"$16,142.61 ",
[out] 10/27/2016 0:00,TRUMP NATIONAL GOLF CLUB,TRAVEL: LODGING - AMEX [SB23.4103],$524.70 ,
[out] 10/27/2016 0:00,TRUMP NATIONAL GOLF CLUB,TRAVEL: LODGING - AMEX [SB23.4103],$524.70 ,
[out] 10/27/2016 0:00,TRUMP INTERNATIONAL HOTEL,TRAVEL: LODGING [AMEX: SB23.2859906],$956.08 ,
[out] 10/27/2016 0:00,TRUMP NATIONAL DORAL MIAMI,TRAVEL: LODGING [AMEX: SB23.2859911],"$1,473.40 ",
Done. Tested 931840 combinations
Checking for transaction sequences totaling $140000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $150000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $160000...Done. Tested 931840 combinations
Checking for transaction sequences totaling $170000...Done. Tested 931840 combinations

We have a sequence of transactions which is:

  • The only sequence, out of 9 million possible sequences, to total a round number of tens of thousands near $130,000
  • The only sequence in which this happens occurs exactly when the payment to Daniels occurs
  • Occurs within a window of 7 transactions, even though we considered a substantially broader window of 10 transactions when looking for "false positives"

Trump laundered money from his campaign to pay off his affair. Full stop. Zero question.
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The Grisly Murder Case That Could Turn Half of Oklahoma Back Into Tribal Lands

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In a legal quirk for the ages, a 1990s capital murder case involving two Native Americans could restore tribal sovereignty to almost half of Oklahoma for the first time in a century—unless the Supreme Court intervenes, that is.

The federal government asked the justices last Friday to review and reverse the Tenth Circuit Court of Appeals’ decision in Royal v. Murphy, an unusual case in which Patrick Murphy, a death-row inmate and member of the Muscogee Creek Nation, claimed Oklahoma lacked the jurisdiction to try him for the murder of another tribal member on what was part of the Creek Nation’s reservation.

Until now, state and federal officials assumed those boundaries no longer existed. To prepare Oklahoma for statehood in the late nineteenth century, Congress stripped the Creek Nation and other tribes in the territory of their courts, governments, and laws. The federal government also compelled the Creek to convert their tribal lands into allotments for private ownership by the tribe’s members, with the surplus land to be sold to white settlers. When Oklahoma joined the Union in 1907, state and federal power held total sway.

A three-judge panel in the Tenth Circuit ruled last summer, however, that Congress never explicitly abolished the Creek Nation’s reservation along the way. Under the Supreme Court’s precedents, the judges concluded, the oversight left the reservation legally intact until the present day. As a result, the panel ruled that the defendant’s murder case could only be tried in federal courts, like other major crimes between Native Americans on tribal land under current federal law.

That was good news for Murphy, who could be retried in federal court if the ruling stands. But the Tenth Circuit’s decision has ramifications beyond a single capital case. It effectively restores the Creek Nation’s sovereign territory after a century in abeyance, handing the tribe a significant and perhaps unintentional legal victory. (Tribal officials did not return a request for comment.) The ruling also raises the possibility of sovereignty claims by other Oklahoma tribes, including the other four of what are known as the Five Civilized Tribes.

“This is something that almost all other tribes in this country have outside of Oklahoma, and this would put Oklahoma tribes on an equal footing with Indian tribes elsewhere,” Judith Royster, a University of Tulsa law professor who specializes in Indian law, told me.

The 1866 boundaries of the Creek Nation.Supreme Court
The original territories of the “Five Civilized Tribes.”Supreme Court

A reservation delineated by the Creek Nation’s 1866 boundaries alone would fill 4,600 square miles of eastern Oklahoma and include more than 750,000 inhabitants, the state of Oklahoma told the Supreme Court in its petition for review. “The 1866 boundaries also include most of Tulsa, the State’s second largest city and home to more than 403,000 Oklahomans,” the state told the court. “A reconstituted Creek territory would be by far the largest Indian reservation by population in the United States.” If the ruling is applied to the rest of the Five Tribes, the state added, just over 40 percent of Oklahoma would become Indian country.

If the Tenth Circuit’s ruling stands, the state’s criminal jurisdiction in that territory would be reduced to minor offenses like traffic violations and crimes against non-Indians. Federal and tribal courts would take over all other cases, with serious crimes left to the federal government to investigate and prosecute. State officials cast the loss of jurisdiction in dire terms, especially if the Murphy ruling is applied to other tribes. “Stripping Oklahoma of criminal jurisdiction over all Indians in this densely populated area, or even worse, in the entire eastern half of the state, would render Oklahoma a fractured, second-class state,” Oklahoma officials told the Supreme Court.

Solicitor General Noel Francisco, who represents the federal government at the Supreme Court, joined the fight on Oklahoma’s side in a brief filed last week. The justices routinely invites solicitors general to weigh in on major potential cases that could affect federal law or foreign policy. This time, however, Francisco took the rare step of filing one before the court asked him for it, a move that underscores the government’s urgent interest in the case.

“The Tenth Circuit’s reasoning could well extend to the original territories of each of the Five Tribes, expanding federal jurisdiction over nearly all of eastern Oklahoma,” the solicitor general’s office warned the court. “And it could have significant implications for application of state tax and other civil laws to Indians in the former Indian Territory. The decision ... thus threatens to disrupt the distribution of governmental authority in nearly half of Oklahoma.”

Groups representing oil and gas companies and the state’s business community also urged the Supreme Court to intervene, framing the situation as economically disruptive. “By effectively declaring half the state to be Indian country, the Tenth Circuit’s decision will upend practically every aspect of Oklahoma’s legal and regulatory regime,” the Oklahoma Independent Petroleum Association complained in its brief.

Royster disputed that interpretation, telling me that the immediate impact on civil matters for Oklahomans would be minimal. “Nothing’s going to happen to my property, nothing’s going to happen to my day-to-day life,” she said. “Nobody except criminals and the federal courts are going to see any immediate changes because of this.”

Those effects are already apparent: State officials told the court last month that at least 46 defendants had already invoked the ruling in lawsuits challenging their own convictions.

The case’s disturbing origins didn’t hint at its unusual outcome. In 1999, an Oklahoma jury found Murphy guilty of mutilating and murdering George Jacobs, was found guilty of murdering his girlfriend’s ex-boyfriend. Both men were members of the Creek Nation and the crime occurred within the 1866 borders. Jurors handed Murphy a death sentence, kicking off a nearly two-decade-long appeals process in state and federal courts.

Lengthy and byzantine appeals are a hallmark of American capital punishment. But Murphy presented an unusual claim along the way: that the federal government, and not the state of Oklahoma, had jurisdiction over his case. He cited the Indian Major Crimes Act, which gives the Justice Department the exclusive power to prosecute serious offenses like murder and kidnapping if they’re committed between Native Americans in “Indian country,” a federal legal term that includes reservations and other lands owned by a tribe.

For Murphy, the case’s stakes are life and death. Federal law also forbids the death penalty for crimes committed on tribal land unless the tribal government authorizes the punishment, which virtually none do. If the Tenth Circuit’s decision stands, Murphy could be retried by federal prosecutors for Jacobs’s murder—but not sentenced to death for it if he’s found guilty a second time.

The case also delves into the darkest chapters of American history. During the nineteenth century, the federal government brutally forced the Five Civilized Tribes—the Creek, the Cherokee, the Chickasaw, the Choctaw, and the Seminole—out of their lands in the southeastern United States. From there, they migrated towards the Great Plains into what was called the Indian Territory. At the time, the federal government promised those lands to the resettled tribes in perpetuity. But influxes of white settlers—and constant accommodations of them by Congress—quickly undermined that pledge after the Civil War.

State courts acknowledged that Murphy and Jacobs were both members of Creek Nation. The Oklahoma Criminal Court of Appeals also held that Murphy’s historical evidence was insufficient to prove that the land on which the crime occurred was still part of Indian country. Murphy then turned to the federal courts, where he argued that the state courts had wrongly interpreted existing precedents on tribal reservations.

Last year, the Tenth Circuit panel sided with Murphy and ordered his conviction to be vacated. In a voluminous 133-page decision, the judges admonished the state courts for ignoring precedents like Solem v. Bartlett, a 1984 Supreme Court case that laid out a three-part test for disputes about Indian reservation boundaries. In Solem, the high court had unanimously ruled that each reservation continues to exist in its original form unless Congress explicitly changes its borders or abolishes it altogether.

“Only Congress can do this,” Royster explained. “And so the question is, looking at all the treaties and statutes for a particular tribe, whether Congress has done this, and in this case the Tenth Circuit said it never did. And if it never did, that post–Civil War reservation is still intact.”

The panel went through each of the three steps in turn. Did Congress explicitly disestablish the Creek reservation at any point? No, the judges concluded, because none of the statutes cited by Oklahoma include specific language to do so. Only days after legislators passed Oklahoma’s statehood act in 1906, for example, they passed laws referencing the Creek Nation’s boundaries as a point of reference in a surveying law.

Is there contemporaneous historical evidence that indicates Congress intended to disestablish the Creek reservation, even if it didn’t do so explicitly? The state cited committee reports and a failed Senate resolution from before statehood, which the panel found unpersuasive of “unequivocal” evidence of intent.

Finally, did subsequent approaches by federal, state, and tribal governments confirm disestablishment? Other federal court rulings made “scattered” references to the reservation’s dissolution, the panel acknowledged, but they hadn’t directly wrestled with the issue.

Accordingly, the panel found that the reservation survived to the present day, and that Oklahoma had wrongly convicted Murphy for a crime committed within its bounds. “The decision whether to prosecute Mr. Murphy in federal court rests with the United States,” Judge Scott Matheson concluded for the unanimous panel. “Decisions about the borders of the Creek Reservation remain with Congress.”

In November, the Tenth Circuit panel declined Oklahoma’s request to reconsider its ruling. Nonetheless, Chief Judge Timothy Tymkovich attached a concurring opinion in which he wrote that the “challenging and interesting case makes a good candidate for Supreme Court review.” The panel’s three judges faithfully applied the high court’s existing precedents to the facts at hand, he explained. At the same time, Tymkovich noted that the justices may find that “the square peg of Solem is ill suited for the round hole of Oklahoma statehood.”

If the Supreme Court takes up the dispute in the coming months, it’d likely rank among the most significant cases of the fall 2018 term. How the justices will decide the case is unclear. Perhaps the most interesting voice in the matter would be the newest justice, Neil Gorsuch, who sat as a member of the Tenth Circuit before his nomination to the high court by President Donald Trump. Gorsuch’s tenure on a Western federal appellate court gave him more experience on tribal issues than most of his colleagues. His record also won the praise and support of native legal groups during his confirmation process.

“Our history with Native Americans is not the prettiest history,” Gorsuch told Arizona Senator Jeff Flake during his confirmation hearing, when asked about his experience with tribal cases. “As a judge, you try very hard to administer the law without respect to persons, equally.”

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The Shield

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In January, the Asbury Park Press (APP) published "The Shield" -- a 19-part investigation of police corruption and lack of accountability in New Jersey. The exposé took two years to complete and revealed that municipalities across the state had collectively spent about $43 million in taxpayer money to cover up the brutal actions of rogue cops who had killed, beaten and stalked more than 200 citizens. In many cases, the cops were not only protected from punishment, but even kept their jobs and received promotions.

The Investigation
Overview: What you need to know about APP's investigation. Protecting The Shield.

Part 1: Secret settlements cost millions, keep bad cops on street. Warning signs ignored.

Part 2: Killer cop Philip Seidle talks about day he killed his wife

Part 3: 'Pile on the rabbit.' Inside death by cop

Part 4: Sex with teens and stalking. The hidden cop problem

Part 5: The high cost of pushing out honest officers. Whistleblower lawsuits drain taxpayers.

Part 6: Money and silence push along bad cops. Officer discipline hidden.

Part 7: No NJ standard for drug testing officers. Residents at risk.

Part 8: Bad cops are built. Here's how.

Part 9: 3 arrests and still on the force. NJ doesn't license officers.

Part 10: What killed man during police restraint? Two different causes of death.

Part 11: How police brutality in NJ can be stopped. Five fixes needed.

Part 12: Seaside Park accused of trying to shut bar over image. Town denies it.

Part 13: Anatomy of a police investigation. A look at one Lavallette pedestrian accident

Part 14: New Jersey's PBA president responds to the paper's 'Shield' investigation.

Part 15: What happens when the chief is accused of being a bad cop? Text message unravels department.

Part 16: Police opposed law aimed to fix Edison department. Department had arsonist and bank robber in its ranks.

Part 17: Officer's fight to clear name took a decade, ruined career. Officer a target over chief's vendetta

Part 18: What would you do if you were a cop? We try a police shooting simulator.

Part 19: Berkeley cop, sued 3 times, demands return to duty.

* CJR: 'We found this and you gotta fix it': Asbury Park's mighty watchdog. How did the Asbury Park Press break the story? "Reporters, who combed through 30,000 pages of documents obtained via public records requests, were pulled from their daily beats for months at a time in order to focus exclusively on the investigation." This despite the fact that the paper has lost nearly half its staff in the last 21 years.

* Protecting the Shield reporters talk police brutality, solutions on NJTV News

* Videos:
- Police Misconduct: reporters discuss their findings: Part 1
- Police Misconduct: reporters discuss their findings: Part 2
- Police Misconduct: reporters discuss their findings: Part 3
- Police Misconduct: reporters discuss their findings: Part 4

* In part 14 of the series, New Jersey PBA President Patrick Colligan was interviewed twice for his response to the investigation. The paper released a transcript.

* "Lawmakers promise changes to dump bad cops after APP investigation"

* Asbury Park Press editors and reporters along with several state and community leaders led a forum in mid-February at the newspaper's offices to respond to concerns raised by the series.
- Two legislators said they would push for police oversight reform in the wake of the investigation.
- State Senator Declan O'Scanlon, Jr. and Deputy Assembly Speaker Gordon Johnson of Bergen County called for reform and cultural changes within police departments to empower officers to speak up without fear of retaliation.
- It was noted that the police department had cost the state millions of dollars in settlements related to "abuse allegations involving 19 deaths, 131 bodily injuries, seven cases of sexual misconduct and dozens of other abuse issues."

* The Press also published a selection of reader responses from Facebook.
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The Blood Unicorn Theranos Was Just a Fairy Tale

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Billionaire Elizabeth Holmes, founder and chief executive officer of Theranos Inc., reacts during a Bloomberg Television interview at the Vanity Fair 2015 New Establishment Summit in San Francisco, California, U.S., on Tuesday, Oct. 6, 2015. The summit assembles titans of technology, politics, business, and media for inventive programming and inspiring conversations around the ideas and innovations shaping the future. Photographer: David Paul Morris/Bloomberg via Getty Images

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Launching on Wednesday? youtube.com/watch?v=WGOohB… twitter.com/RocketLab/stat…

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It's Business Time. Next launch coming soon. rocketlabusa.com/news/updates/i… pic.twitter.com/xc3pzsrCzv

Posted by RocketLab on Tuesday, March 13th, 2018 11:46pm

442 likes, 110 retweets

Posted by DJSnM on Wednesday, March 14th, 2018 12:08am

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