Carlo should have smelled the rat when he heard he was going to be Michael's right hand man in Vegas, while Hagen was out.
Carlo never smelled the rat because he actually believed he was Capo Regime Material when in fact he was nothing more than a philandering, wife beating moron.
"Io sono stanco, sono imbigliato, and I wan't everyone here to know, there ain't gonna be no trouble from me..Don Corleone..Cicc' a port!"
