They refused to believe the reports of all the atrocities that Hitler and his government had committed during the war. They refused to believe the stories of the millions of Jews murdered as well as other nationalities and ethnic groups. A lot of Germans still revered him and almost deified him, even after the war was over. It wasn't until much later that they realized what a monster he really was.
The state of denial of the PSU fanbase is eerily similar, not to mention disturbing. (I'm not really comparing Paterno to Hitler; just noticing that the psychological conditions of both the Germans and Penn state fans right now share a lot of commonalities.)