I have decided to stick with our original plan/rules and DQ Ambition as a whole. I understand this punishment comes off a little harsh and I wish it didn't have to happen this way. I was really hoping that by making it clear that the whole team would be DQ'd that the leaders would have properly vetted their roster (Even ask an Admin for more clarity on a player) so we wouldn't run into this issue.
I know that it does seem a little unfair but I can't go back on my rules. In the future I will remember this situation and make it even more clear that the leaders are responsible for their roster and that its okay to ask an Admin to check a player for them if they don't know them well enough or their history before submitting their final roster.
As for the brackets, with 7 teams and after what happened, its best if I make a new random seeded setup forcing 1 team by random to a first round bye. (Agreed upon by the majority of the gang leaders in the event)
I don't have time to make another video showing that its random but here are the new brackets.
I will update the original post to this new info