In response, Oracle and Ben Ainslie Racing yesterday forfeited their results from the past three America's Cup World Series regattas, and have been ordered to return their trophies and prizes. The points for the series are being rescored.
But there could be far more serious implications for the teams, and in particular Oracle, with the international jury investigating them under rule 69 of the racing rules of sailing, and article 60 of the protocol which governs the America's Cup. Both rules relate to upholding the integrity of the sport.
The protocol states competitors shall not engage in any conduct or activity that "may impair public confidence in the honest and orderly conduct of the America's Cup".
Yachting website Sail World reported that deliberate breaches of class rules are regarded extremely seriously as "they are difficult to detect and sailing is a sport which relies on the integrity of sailors not to take advantage of a situation. Penalties for intentionally altering a measurement condition of a boat can therefore be severe, and may include substantial bans from the sport on both those directly involved and those not directly involved, but who had knowledge of the situation."
Oracle chief executive Russell Coutts yesterday quickly moved to distance himself and his frontline sailors from any wrongdoing, issuing a statement saying the illegal modifications were made "by a small number of team members involved in the AC45 circuit, without the knowledge of management or the skippers, and without having followed standard internal procedures".
One of the big problems with the smaller one-design AC45 catamarans was getting enough weight forward which affected stability, but Coutts said modifications had no impact on the performance of the boats.
"Our team is very disappointed by this turn of events, and I believe that voluntarily withdrawing from these past AC45 regattas is the appropriate corrective action," he said.
While the breaches were made in the lower-profile warm-up event, the violations are another smudge on an already troubled regatta and will raise further questions over the general conduct of the Cup defenders.
Team New Zealand would not comment last night.