Perhaps this is an example of an "abuse of trust."
Abuse of Trust
References in periodicals archive
IPCC Commissioner for Wales Tom Davies said: "This was an appalling abuse of trust by a police officer dealing with three vulnerable women who expected the police to protect them. Two officers are suspended over sex cop claims; Policemen face ... by South Wales Echo (Cardiff, Wales)
Health and Care Professions Council panel chairman Claire Bonnet said: "This was an abuse of trust. Paramedic struck off for sex act by Sunday Mirror (London, England)
(The Free Dictionary)
A word for the peoples reaction might be incredulous, i.e., the people are incredulous, or express incredulity, that a person held in such high regard could ever have committed such outrageous acts.
Possibly, the people are incredulous because they have invested their trust in this respected businessman, so that even contemplating such an affront to morality threatens to undermine their faith in the status quo, after all, if this man is capable of such a shocking act, how many others might conceivably also be as corrupt? Another possible barrier to acceptance is that those who express such disbelief are themselves corrupt and would rather avoid the whole subject matter.
1: unwilling to admit or accept what is offered as true : not credulous : skeptical
3: expressing incredulity
incredulity noun: a feeling that you do not or cannot believe or accept that something is true or real
In this age of Kali Yuga, where each new day brings a myriad of fresh scandal - perpetrated by our elected representatives, healers & holy men, business leaders and law enforcement officers - what can possibly account for this incredulity? Does it really stem from the attributes of the perpetrators? Are they truly Teflon-coated, untouchable, above the law and beyond reproach?
Me thinks not! Only a form of collective denial - a willing (but unconscious) blindness - could possibly account for the phenomena attested to in this OP. What 's the name for that? See Dan Dascalescu's spot-on answer.