On October 8, 1974, it collapsed in obscure circumstances involving Michele Sindona, who was a renowned Mafia-banker and member of the irregular freemasonic lodge Propaganda Due.

[5] In 1970, Roth lost his position as Chairman and was pushed off the board of directors in favor of an influential future promised by Michele Sindona.

In 1972, Michele Sindona, a banker with close ties to the Mafia, the masonic lodge P2, and the Nixon administration, purchased a controlling interest in Long Island's Franklin National Bank from Laurence Tisch, Chairman of Loews Corporation, which owned hotels in Italy.

Later the U.S. Comptroller of the Currency declared Tisch an unqualified director for reasons of conflict of interest, paving the way for Sindona to take over Franklin.

Tisch was later sued by the Federal Deposit Insurance Corporation (FDIC) for breach of fiduciary duty with respect to the sale of his shares to Sindona.

As a result of his acquisition of a controlling stake in Franklin, Sindona finally had a money laundering operation to aid his ties to Vatican Bank and the Sicilian drug cartel.

Allegedly Sindona used his influence in the Republican Party and the Nixon administration to ensure that his background did not inhibit his ability to become vice chairman and largest stockholder in the bank.

[6] On October 8, 1974, the bank was declared insolvent due to mismanagement and fraud, involving losses in foreign currency speculation and poor loan policies.