London Welsh chief executive Tony Copsey has said the club was "hugely disappointed and shocked" after being hit with a five-point deduction and £15,000 fine for fielding an ineligible player in this season's Aviva Premiership.
Copsey also confirmed the club would lodge an appeal against the ruling. It follows a case heard by a Rugby Football Union Premiership regulations panel of inquiry on Tuesday, with the verdict announced by the RFU on Thursday night.
Welsh, who now go bottom of the Premiership two points behind Sale Sharks, had a further five-point deduction suspended until the end of next season. The player in question is scrum-half Tyson Keats, who appeared in 10 Premiership games this term while not holding effective registration with the RFU.
The club's former rugby manager Mike Scott remains the subject of a separate RFU disciplinary hearing relating to the registration of the same player. He has been charged under RFU rule 5.12 for "conduct prejudicial to the interests of the Union or the Game". A hearing will be held at a later date.
In a statement, London Welsh said: "The club was unknowingly the victim of one individual's fraudulent conduct, and it was London Welsh which discovered the fraud and brought it to the attention of the RFU. The panel, however, has punished London Welsh on the basis that it is to blame for what that individual has done."
And Copsey added: "London Welsh are hugely disappointed and shocked by the ruling made by the RFU hearings committee, which we believe is extremely harsh under the circumstances. It is our belief the ruling is fundamentally flawed, and I can confirm that the club will definitely be appealing the decision."
London Welsh brought the matter to the RFU's attention after conducting an internal investigation last month. The club also said they wanted to stress than no fault in the matter resided with scrum-half Keats.
The case surrounding New Zealander Keats, who joined London Welsh from now-defunct Italian club Aironi, was visa-related.
Panel chairman Jeremy Summers said: "This was an extraordinary case, and one that it is hoped will never be repeated. The sanction imposed was structured to reflect the seriousness of the matter, which included conduct that was dealt with by the police, but also to import a rugby-based proportionality to the overall position that took into account the wider interests of the game."
Summers was joined on the panel by Premiership Rugby chief executive Mark McCafferty and Peter Budge.