New director O'Shea believes Quins can challenge for silverware
Harlequins chief executive Mark Evans said the 'Bloodgate' controversy will forever taint the club's reputation.
Former coach Dean Richards is serving a three-year ban for his role in the controversy, while Quins have appointed Conor O'Shea as his successor.
The former Ireland full-back takes full control against Bath on Saturday.
"You would be incredibly naive to think (the Bloodgate stigma) will ever disappear completely. Things like that don't," said Evans.
"They become part of history and, like good or bad seasons, are woven into the fabric of any club."
The 'Bloodgate' saga signalled the end of Richards' four-year coaching career at The Stoop when he ordered back Tom Williams to feign injury in the 6-5 Heineken Cup defeat by Leinster in April.
Williams chewed a fake blood capsule to fabricate a cut to the mouth, allowing substituted fly-half and goal-kicker Nick Evans to return to the field with five minutes remaining of the match.
Would you be shocked if I said the club's in great condition? The energy and enthusiasm is extraordinary
New Quins boss Conor O'Shea
Television cameras spotted Williams winking towards the bench with "blood" smeared around his mouth, while the winger later had his lip cut in an attempt to make the injury appear genuine.
But a subsequent investigation into the incident saw the west London club fined £259,000 by the European Rugby Cup panel, while Richards was handed a three-year worldwide ban.
Williams had a one-year band reduced to four months on appeal, while physiotherapist Steph Brennan was handed a two-year ban and doctor Wendy Chapman had misconduct charges dismissed.
"We lost in terms of our reputation and a lot of money," added Evans. "What happened took the wind out of our sails. I think it would have done with any club."
Quins considered former Wasps and British and Irish Lions coach Ian McGeechan, former Scotland coach Frank Hadden, South Africa assistant coach Gary Gold and ex-assistant coach Tony Diprose before opting for O'Shea.
The 39-year-old arrives with an impressive CV having previously worked with London Irish, the Rugby Football Union as well as the English Institute of Sport, for whom he has been working for the past 18 months.
And O'Shea revealed he had spoken to Richards prior to taking up the full-time reins at The Stoop.
"He did an enormous amount for this club, he's an icon and a legend of English rugby," said O'Shea.
"He's still incredibly passionate about Harlequins and it was even more striking when I met him."
Head coach John Kingston has overseen an inconsistent season since Richards' departure, with the club failing to qualify for the Heineken Cup quarter-finals while languishing in eighth place in the Premiership.
But O'Shea said the squad has the potential to challenge for silverware.
"Would you be shocked if I said the club's in great condition? The energy and enthusiasm is extraordinary," he said.
"There's been a huge amount done in recent years in terms of breeding home-grown talent.
"Historically in the Premiership, an English-based squad has proved the most successful route. What I've seen is a squad with a great age profile and great energy."