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7 years does seem kinda extreme for an unproven allegation. But as to why the University would still take action even though the pledges denied they were hazed, is probably because the University was afraid that the denials were not exactly truthful. I mean if the pledges were hazed (Im not saying they were just throwing out a hypothetical situation) and they were called in and said yes we were hazed then if they chose to stay with the organization there is a rather good chance that the pledges that admitted to being hazed would be "punished" by the other members of the fraternity. Also I would say there is probably some chance that even if they were hazed the pledges would have lied about it anyway in the "spirit" of "brotherhood".
To me it seems like a very unfortunate situation.
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