London Welsh have lost their appeal against the points deduction and fine imposed by the RFU for fielding an ineligible player.
New Zealander Tyson Keats played 10 Premiership games for the Exiles after former team manager Mike Scott falsified a player registration form.
Scott was banned from the sport for life by the RFU and London Welsh claimed he was acting individually and immediately appealed the decision.
But the panel, which acknowledged "exceptional circumstances" in the case, found that the Exiles had benefitted for too long from being able to select Keats.
While the points deduction and fine stand, the panel did remove the suspended five-point penalty imposed until the summer 2014.
And while the Exiles, now bottom of the Aviva Premiership by five points with four games left to play, welcomed that decision, CEO Tony Copsey could not hide his overall disappointment.
“The club is hugely disappointed by the decision of the Independent Appeal Panel to uphold the five-point deduction for this season," he said.
“We are particularly disappointed for the players, who’ve given everything they can for the club, and ultimately it is they who have been punished for something completely beyond their control.
“However, there are still four games remaining in the season and the focus and efforts of the players, the coaching staff and everyone at London Welsh is now on those remaining matches.”
An Exiles spokesperson added that the revoking of the suspended points deduction justified the club's decision to appeal.
He said: "The club also believes that an appeal was necessary to restore the good name of the London Welsh RFC, as once it became clear what had happened, the club made every effort to 'remedy the situation' and did not, at any stage, deliberately attempt to deceive the RFU.
"A point acknowledged by the panel in their findings.
"The club maintains, however, that it has ultimately been punished for the completely unnecessary fraudulent actions of one individual, whose actions the panel accepted 'could not have been predicted'."