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The ship had just completed a top secret mission delivering parts for the construction of atomic bombs. After delivery of the parts the ship travelled to Guam and then on to the Leyte Gulf in the Phillipines. The ship was halfway to Leyte when on July 30 it was struck by two torpedos from the Japanese submarine I-58, it sunk in about 12 minutes. Of the 1,196 aboard, about 900 made it into the water in the twelve minutes before she sank. Few life rafts were released and most survivors wore the standard kapok life jacket. Shark attacks began with sunrise of the first day, and continued for five days until the men were finally spotted in the water and rescued. Because of communications errors and other problems, the ship was not reported missing when it failed to arrive in Leyte Gulf as scheduled on July 31. The survivors were discovered by accident on August 2, when they were spotted by a passing U.S. naval aircraft. By that time only 316 of the men remained alive and were rescued. The U.S. government delayed reporting the tragedy until August 15, 1945, the same day it announced that Japan had agreed to surrender.
Leonard's fate was changed from missing-in-action to dead in October of 1945.
The commanding officer of the Indianapolis, Capt. Charles B. McVay III, was among the survivors. He became the only ship's captain in the U.S. Navy to be court-martialed in connection with the loss of his ship in combat in World War II. In February 1946 McVay was found guilty of negligence for having failed to steer the ship on a zigzag course to help evade enemy submarines. He was found not guilty of another charge: having failed to promptly issue orders to abandon the ship after the torpedo attack. The military court recommended clemency, and the sentence (a decrease in seniority) was set aside. Upon his retirement in 1949, McVay was promoted to rear admiral. He committed suicide in 1968.
Many survivors of the tragedy believed that McVay had been scapegoated by the U.S. Navy. They contended that the captain had been ordered to zigzag only at his discretion and that poor visibility before the attack made that inadvisable. At the court-martial, the commander of the Japanese submarine I-58 testified that zigzagging would not have thwarted the torpedo attack. In addition, McVay's request for a destroyer escort had been denied. It later came to light that the U.S. Navy had known that Japanese submarines were operating in the area, but McVay had not been warned (perhaps to avoid revealing that the Japanese navy's secret code had been broken). Following a campaign to clear McVay's name, in 2000 the U.S. Congress passed a joint resolution exonerating him. In 2001 the U.S. Navy placed in McVay's record a memorandum noting that the resolution had absolved him from blame.