After convoy PQ-17 was dispersed on 4 July 1942 the Daniel Morgan (Master George T. Sullivan) traveled with four other ships to Archangel. On 5 July, they were attacked many times by German Ju 88 aircraft of the KG 30. About 18.00 hours, five Ju 88 from the III./KG 30 attacked the ship at 75°08N/44°10E and three near misses caused the #4 and #5 holds to flood and the ship to list to starboard.
At 22.52 hours, the crippled Daniel Morgan was hit by one torpedo from U-88 on the port side amidships. A few minutes later a second torpedo struck the engine room, put the main and steering engines out of commission. The ship sank stern first shortly afterwards. The eight officers, 31 men and 15 armed guards (the ship was armed with one 4in, one 3in and four .50cal guns) abandoned ship in three lifeboats. One of the boats capsized, the Chief Mate and one crewmen drowned. A third men died from a concussion. Bohmann questioned the master and got wrong answers. He told them to follow the U-boat, which they did for 90 minutes, before U-88 suddenly pulled away at full speed.
At 08.00 hours on 6 July, the survivors were picked up by the Soviet steam tanker Donbass. The Soviet ship dropped anchor at Ioanka two days later and proceeded later for the White Sea and Molotovsk.

The earlier ship of the master George T. Sullivan was the City of New York, which had been sunk by U-160 (Lassen) on 29 March 1942.