At 21.52 hours on 27 June 1942 the unescorted Potlatch (Master John Joseph Lapoint) was hit by one torpedo from U-153 about 650 miles east of the Virgin Islands, while steaming on a nonevasive course at 7 knots due of heavy smoke coming from the stack. The ship had stopped several times during the day to check the water content in the fuel oil. The torpedo struck on the port quarter near the engine room about ten feet below the waterline. The explosion blew a hole through the deck, threw the trucks and tanks on deck into the air, buckled the deck plates and damaged the steering gear. She immediately began settling on an even keel and sank by the bow within five minutes. The seven officers, 32 crewmen and 16 armed guards (the ship was armed with one 4in, four 20mm and two .30cal guns) abandoned ship in one lifeboat, four liferafts and two doughnut rafts. The gunners manned their stations until the after gun was awash and then jumped overboard. The U-boat surfaced after the ship sank, picked up some spare tires from the cargo, questioned the survivors and handed over cigarettes to them before leaving the area (They reported the ship under her former name Narcissus).

One officer and five crewmen were lost with the ship and two later died in the lifeboat (one from exposure on 29 June and another fom an infected shark bite on 18 July) and were buried at sea. The lifeboat took the four rafts in tow, but soon all survivors were transferred into the boat because the rafts slowed down the sailing too much. They sailed in the only lifeboat for 26 days with little food or water until they made landfall on the uninhabited Great Inagua, Bahama Islands. They found some water by following some wild jackasses to a water hole, but had to sail to the also uninhabited Little Inagua for more where they stayed for two days and then continued to Aklins Island, landing on 29 July. From there they were brought by the yacht Vergermere (Owner Betty Carstairs) to Nassau, arriving on 1 August.

The master, John Joseph Lapoint was awarded the US Merchant Marine Distinguished Service Medal for especially meritorious service under unusual stress and hazards. He had sailed the crowded boat to the nearest land only navigating by the sun and stars. He survived another sinking when his next ship, the Liberty ship Samuel Gompers was torpedoed and sunk by the Japanese submarine I-10 (Yamada) in the South Pacific on 30 Jan 1943.