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I wouldn't be surprised if everything you've said here is true. In fact, I'd venture to guess that this sort of thing is much more common than you'd ever want to know -- and part of it is because even people in law enforcement find it much easier to live in a state of denial than deal with a problem.

A few years ago there was a series of incidents in a small, wealthy town not far from where I live. They involved a small financial services company that had an outstanding reputation and was getting lots of attention even though they had only been in business for less than a year.

Within less than a month after this business received a "Business of the Month" award from a prominent local civic group, the owner was caught trying to destroy records and burn his building down. The police arrived at the scene and took him into custody, and he apparently went ape-sh!t in the police station and had additional charges filed against him. It turns out his business was all a huge smoke-and-mirrors game, and that was just the beginning.

Within several weeks of his arrest there was a long list of additional charges that had piled up against him -- including multiple cases of passing bad checks at several businesses around town. Several days before the arson incident he was arrested by the local police for "stealing" his own car (he had brought it to a local service station for some repairs, then came back in the middle of the night with another set of keys and drove it away without paying for the work). Stories began to pop up in the local newspaper about a restraining order related to several incidents with an ex-girlfriend, along with several violent incidents at his parents' home with his own family members.

All of these incidents occurred before he received his "Business of the Month" award, and were well-known to most people around that town. The police, in fact, knew to deal with him very carefully when he was arrested on the other charges because they knew of his history.

In a real twist of irony, the local prosecutor ended up dropping nearly all of the charges against him related to the arson case, the bad checks, the "theft" of his own car, and all that. He ended up copping a plea to various embezzlement charges that were brought against him by his former clients, and they figured his sentences would have run concurrently anyway if they pursued the other charges against him.

If you talk to anyone in that town today (just a couple of years later), they'll pretend they never heard of the guy and they'll pretend that business never existed.

It's amazing just how pathological even "normal" people can be when they refuse to face reality.