Around 7:30 PM, Hobbs and his fifteen-year-old brother Russell had made the short trip from their home on St Nicholas Ave to the Apollo Theater on 125th Street for a show, not emerging until 12.30 AM. When they stepped back onto 125th St, they saw crowds down the block at the intersection with 7th Ave, and went to investigate. They followed as police pushed the crowd north on 7th Ave. As people milled in front of a damaged auto parts store at 2150 7th Avenue near 128th Street, a police radio car pulled up, and one of the officers inside, Patrolman John McInerney got out. Fearing that they would be beaten by the police, the boys and the others in front of the store ran up 7th Ave. Here the accounts of the boys and seven Black eye-witnesses and those of the two white patrolmen diverged.

McInerney and his partner, Patrolman Watterson, claimed that as they were driving south their attention had been drawn to the auto parts store by the noise of breaking glass, and they had seen Lloyd in the window handing items out to those on the street. Three of the eye-witnesses, Howard Malloy, Arthur Moore and Marshall Pfifer, said all the windows of the store had been broken at least an hour earlier and nothing remained in the display by the time the Hobbs brothers arrived there. The patrolmen said that Lloyd climbed out of the window with items in his hands as they pulled up, and when McInerney pursued him up 7th Avenue and called on him to halt, continued to run. When those running from the patrolman got to 128th Street, Lloyd broke away from the group and turned west on to 128th Street. McInerney then shot the boy. Warren Wright, standing in the entrance of the apartments above 2150 7th Avenue, south of the store, Howard Malloy, Arthur Moore, Samuel Pitts and Marshall Pfifer, standing on the corner across 128th Street from the auto supply store, in front of Battle's Pharmacy, to which the crowd was running, and John Bennett, in 201 West 128th Street toward which Lloyd turned and ran, all testified that the boy had nothing in his hands as he ran and that McInerney did not call to him to halt before shooting him. After the bullet hit Hobbs and he fell to the ground, McInerney and Watterson, who had remained in the car, backing it into 128th Street, said Lloyd dropped a car horn and socket set, which McInerney picked up. Seven witnesses said that there was nothing on the ground next to the boy.

The two patrolman loaded Lloyd Hobbs into their car and drove him to Harlem Hospital. Russell Hobbs had kept running up 7th Avenue and had not seen the shooting. He learned from the crowd at the scene that it was his brother who had been shot and driven away and immediately ran home to tell his parents, Lawyer and Carrie Hobbs. The family rushed to Harlem Hospital. When they found Lloyd, he told them, “Mother, the officer shot me for nothing. I was not doing anything.” McInerney, guarding the boy, said "Why didn't you halt when I told you to?" Lloyd offered the same account when questioned in the hospital by Homicide Bureau detectives, in a statement recorded by a police stenographer.

Lloyd Hobbs appeared in all seven published lists of those injured in the disorder, in the New York Evening Journal, New York Post, Daily News, New York American, Home News, New York Herald Tribune, and Brooklyn Daily Eagle.

In the following days, Lawyer Hobbs went to the 28th Precinct several times trying to make a complaint against the officer who had shot his son. He also sought help from the New York Urban League, giving them a statement about what had happened to his son on March 28, which they sent to the MCCH. As a result, Hobbs and his family were among the witnesses asked to come to the MCCH's first public hearing on March 30. Only Russell testified that day, briefly describing how his brother had been shot. A few hours later, at 6:30 PM, Lloyd Hobbs died in Harlem Hospital, the fourth death resulting from the disorder. While the New York Times, Daily News, New York Age, New York Amsterdam News and Afro-American referred to Russell's testimony in reporting Hobbs' death, the New York Herald Tribune, Times Union, Home News, Daily Mirror, New York American and Chicago Defender reported only the boy's death in their stories.

The next week, at the MCCH hearing, Lawyer, Carrie and Russell Hobbs testified, together with three Black men who had witnessed the shooting, Howard Malloy, Arthur Moore and Samuel Pitts, Dr Arthur Logan, one of the physicians who treated Lloyd Hobbs, the police stenographer who had recorded a statement from the boy soon after he arrived at Harlem Hospital, and James Tartar, a Black investigator for the MCCH. Assistant District Attorney Saul Price heard the testimony of the three eye-witnesses soon after the hearing and had them appear before the grand jury on April 10 so they could consider charges against Patrolman McInerney. The grand jury also heard from Russell Hobbs, both his parents, McInerney's partner Patrolman Watterson, the police stenographer, the detective who investigated the shooting, John O'Brien, and the owner of the automobile supply store. Patrolman McInerney also offered to testify, but the grand jury opted not to hear him. They dismissed the case.

The MCCH nonetheless continued to investigate the boy's killing, hearing testimony from McInerney's partner, Patrolman Watterson and Detective O'Brien, who investigated the shooting, at a hearing on April 20 marked by angry interjections from the audience. Four additional witnesses to the shooting testified at a MCCH hearing on May 18. James Tartar, the MCCH investigator, also obtained information that McInerney had not turned in the items he claimed to have found next to Lloyd Hobbs until April 8, more than two weeks after he shot the boy. That interval raised the possibility that the patrolman had not found the items at the scene but had obtained them later, when he needed to justify the shooting. As a result of that information and the testimony of additional eye-witnesses, Assistant District Attorney Saul Price presented the case to the grand jury for a second time on June 10. After hearing from the new witnesses, and from Tartar about the absence of the allegedly stolen items from police records and the Police Property Department until April 8, the grand jury again dismissed the case without hearing testimony from McInerney.

The Police Department had committed to an internal hearing on the case before ADA Price had decided to resubmit it to the grand jury. The hearing took place on June 14; in attendance were James Tartar and E. Franklin Frazier, the Howard University sociologist who had recently started work leading the MCCH's investigation of Harlem. It was the first time that anyone outside the Police Department and the District Attorney's office heard Patrolman McInerney's testimony. While Tartar and Frazier were unpersuaded, senior police officers found the shooting of Lloyd Hobbs was justified, reprimanding the patrolman only for his delay in handing in the items he claimed to have found at the scene.

While two grand juries and a Police Department hearing exonerated McInerney, the MCCH and the Black press did not share that view. Arthur Garfield Hays gave a central place to McInerney killing Hobbs in the Report of the Subcommittee he submitted to Mayor La Guardia on May 29, 1935. He characterized the killing of Lloyd Hobbs as "inexcusable." E. Franklin Frazier included that material in the Final Report of the MCCH, framed in even harsher terms: the killing of the boy was "a brutal act on the part of the police." Police Commissioner Valentine was unmoved by that censure. He responded to both reports by asserting that Lloyd Hobbs had been looting the store and that two grand juries had exonerated McInerney.