[Mr Rick]

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Let's assume for certain reasons you cannot just ban these 7 from entering the tournament (unfortunately). What would be our best plan of action? What steps should the tournament director take?

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1) Make sure that in your tournament rules is a rule stating "Checking down hands by agreement with one or more opponents is illegal"
2) Make sure you have a written set of rules available for all players participating.
3) As TD when you see the "gang of 7" entering your tournament scope out the tables in which 2 or more are playing and watch every hand they play together.
4) If they "soft play" a hand, make it clear to the dealer before the hand is over, that both hands must be turned over, even if one player attempts to muck his hand on the river.
5) If at any point one of the gang has the nuts vs. another member of the gang and fails to bet them by the river, show them the door immediately. Pick a time period and don't allow them to return. A time period of a month for a first offense seems reasonable to me.
6) If at any time, you think they are "soft playing" one another, based on your opinion - issue a penalty (time out). Escalate the penalties for subsequent offenses.

*) Note that it is reasonable for players to check down hands implicitly when one or more players is all-in.

If you do not stand up to these guys, they will end up being your only customers...