Michele Sindona is a troubled financier. His Italian banking empire has collapsed in insolvency. Long Island's Franklin National Bank, of which he bought effective control in 1972, went bankrupt in 1974. He lost his Societa General Immobiliare, a giant real estate operation with worldwide holdings.

The Italian government has brought criminal charges against him, accusing him of draining$225 million from a now-bankrupt bank in Milan. A federal judge here has ordered Sindona'a extradition to Italy, although the Sicilian-born financier has been free on a$3 million personal recognizance bond while he appeals the order.

Sindona's troubles were compounded last week when a federal grand jury here returned a 99-count indictment charging him with fraud both in the acquisiton and running of Franklin National Bank.

When it failed, finally, after a massive rescue effort by the Federal Reserve Board, Franklin was the 19th largest bank in the United States, the biggest bank ever to fail in the nation's history.

For his past, Sindona says he is innocent ofall charges and the victim of political harassment in Italy as well.

After the federal indictment last Monday, his Manhattan office issued a statement saying, "Insofar as Franklin National Bank is concerned, I was the principal victim of its collapse since, through no fault of my own, I lost not only my$40 million investment in the shares of that institution, but suffered incalculable direct and indirect damages because of its failure."

Sindona pleaded innocent Friday when he was arraigned in U.S. District Court here.

The grand jury indictment - which federal officials say will not interfere with the extradition proceeding - details the intricate steps by which Sindona allegedly looted the Milan banks he controlled to come up with the funds to buy Franklin National, then drained deposits from Franklin National to put funds back in his Italian institutions.

All of the funds made the trip from Italy to the U.S. via Switzerland, most of the time through a Zurich bank that Sindona also controlled, according to the 46-page indictment.

The indictment gives a rare glimpse of how funds can be shunted in a matter of hours from Milan to New York and be laundered in a Swiss bank way station to conceal the nature of the transfer from both Italian and U.S. authorities.

To understand the admittedly complex transfers, a brief introduction to the institutions involved in necessary.

Sindona controlled two banks in Milan (which later were combined, then went bankrupt): Banca Privata Finanziaria and Banca Unione. He controlled one bank in Zurich, Amincor Bank. He also owned what authorities call a shell, or dummy, corporation, a Luxemberg-based company called Fasco International Holding. Fasco's role in the drama was to receive the funds Sindona allegedly "misapproproated" from his Italian banks, then use them to buy Franklin National Corp., the parent of Franklin National Bank.

Fasco's only assets for a long time were one million shares of Franklin National Corp representing 21 6 percent of Franklin's outstanding stock.

Later, Fasco would get another $27.18 million from Sindona's banks and use it to buy Talcott National Corp., a Chicago-based fianancial firm.

The story began on July 7, 1972, when, the grand jury said, $5 million of general funds and deposits from Sindona's Banca Privata Finanziaria were transfered to a Swiss bank, Privat Kredit.

Although the $5 million was to be used as a down payment on one million shares of Franklin National stock, that is not the way the transaction showed up in Banca Privata's books. Instead, Banca Privato showed that it had made $5 million time deposit with Privat Kredit. And, the grand jury said, Privat Kredit cabled back to Banca Private confirmation of the depost.

Private Kredit then turned around on the same day and made a $5 million loan to Fasco International, under a secret agreement with Privata. The kicker was that Privat Kredit did not have to give back Banca Privata its so-called deposit unless and until Fasco repaid its so-called loan.

In fact, the grand jury said, Privat Kredit was paid a commission for its help in transferring unds from Banca Privata to Fasco.

On July 11, Fasco used its $5 million "loan" from Privat Kredit as a down payment on the stock with Loew's Theaters Inc. and Lawton General Corp.

That is also the last time the grand jury speaks of Privat Kredit, which apparently was not controlled by Sindona.

On July 20, 1972, the grand jury, Sindona's Banca Unione sent $18 million of its funds to Sindona's Amincor Bank. Banca Unione recorded it as a time deposit with Amincor, which in turn shipped the $18 million to Fasco.

On the same day, Banca Privata sent $17 million to Amincor, which then sent the money to Fasco. Fasco in turn gathered in the $35 million and, on the same day (July 20), shipped its $35 million in "loans" from the Swiss bank to Loew's and Lawton to buy all one million shares of Franklin.

Three months later to the day, the grand jury said, Sindona (and his associate, Carlo Bordoni, who also was indicted) used the same ploy to take $15 million out of Franklin and put it back into Banca Unione. This time, however, the grand jury said, Sindona's associate, Bordoni, had to make a $105,000 bribe to a bank manager to pull it off.

Sindona's Banca Privata Finanziaria owned a small interest in another Milan bank. Banca Per Finanziamenti A Medio Termine, called Interbanca for short. Sindona was on Interbanca's board.

Franklin National sent $15 million to Interbanca, which Interbanca confirmed as a time deposit. However, the grand jury said, the bribed general manager, Gino Uglietti, turned around and shipped the alleged time deposit off to Amincor, which in turn sent the money to Banca Unione.

The grand jury does not say whether this transaction showed up as a return of most of the $18 million that Banca Unione allegedly had on deposit at Amincor since July 20, 1972.

Five months later, Fasco moved to buy 1.6 million shares of the Chicago-based financiaal company, Talcott National Corp., from William O'Neill & Co. for $27.18 million.

How did Fasco come up with the money? From Banca Unione again, through Amincor.

When Sindona decided that Franklin National Corp. should buy Talcott National from Fasco (presumably to come up with funds to put back in Amincor so it could pay off the alleged time deposit it held for Banca Unione), Sindona had a problem.

Franklin National was running a loss in its foreign exchange trading that creative accounting was hiding. It needed to show that profit to federal regulators. Once again, it was Banca Unione and Amincor to the rescue.

Banca Unione made another $2.001 million time deposit at Amincor, and Amincor shifted the money to Franklin.

Franklin put the money in its coffers and falsified its records to make it look like a $2 million profit in foreign exchange trading with Amincor bank.

Franklin, which was not a healthy bank to begin with, finally succumbed a year later when it sustained $30 million in foreign exchange losses, which even Sindona's once vast but crumbling empire evidently could not cover. CAPTION: Picture, MICHELE SINDONA . . . troubled financier