At 09.43 hours on 27 Jan 1942 the unarmed and unescorted Francis E. Powell (Master Thomas J. Harrington) was hit by the last torpedo from U-130 about eight miles northeast of the Winter Quarter Light Vessel, while proceeding completely blacked out at 10.5 knots. The torpedo struck on the port side aft of the midships house, between the #4 and #5 tanks. The explosion started a small fire in the pump room and destroyed the radio antenna. Then the U-boat was sighted a few hundred yards away which had planned to attack with the deck gun but gave up when other vessels came into sight. The eight officers and 24 crewmen abandoned ship in two lifeboats. The master was crushed to death when he slipped and fell between the boat and the ship. The same boat was lifted back on the ship by a wave and the occupants had to launch another boat. Another officer and two men were also lost. The tanker later broke in two, caught fire and sank at about 14.00 hours.

After five hours, 17 men in one of the boats were picked up by the American steam tanker W.C. Fairbanks and landed at Lewes, Delaware. The remaining eleven survivors in the other boat were picked up by a US Coast Guard boat from the Assateague Station and landed at Chincoteague, Virginia.