They thought it was fake...because back before he became evil, he performed several screw-ups that weren't actually evil but seemed that way (or at the least were ends-justify-the-means to save the party and the nation and defeat the party's enemies), so people started spreading rumours about his evil deeds that were demonstrably false (such as "I heard Dhistan Moonshadow stormed Mt. Celestia!") that he proved to his party. After that, they stopped listening to the rumours, and it was at that point when he started to actually perform the vile deeds.