Carlton Lassiter always knew Shawn Spencer was a fake.
He knew it from the day they met.
At first it was just him refusing to believe the idea and needing to spite this man child. He didn't believe in psychics. Never would. He hated private investigators and psychics and all those fake cops. I guess, in this, he was more like Henry Spencer than he thought.
Later, after Juliet had joined the SBPD and Shawn started working cases for the department, he still wouldn't believe it. He knew that if he wanted or needed to he could easily expose Shawn as as a fake.
He probably would've too. But he didn't. For this reason: As time passed Lassiter grew into the role of an older brother sort of figure to Juliet. He became very protective of her and didn't want her getting hurt. He noticed how, although skeptical, she seemed to believe Shawn's charade. He also noticed how close Shawn and Juliet came to be. He saw how much Juliet came to care for Shawn and no matter how much he disliked Shawn he didn't want to ruin that for her. So he never exposed the charade.
Years later, when Lassiter discovered that the pair had been seeing each other without his knowledge, he was angry at them. Angry because Juliet decided she didn't want to tell him and angry because Juliet still wasn't aware of the charade that Shawn was playing. He confronted Shawn and when the man Lassiter had come to associate with the term childish exclaimed that he loved Juliet, he was shocked. Surprised that Shawn, of all people, could... claim such a big devotion to his partner. He realized that maybe he had learned to like, if only tolerate, Shawn but he knew he had accepted him.
He still threatened Shawn though. He would not be letting Juliet get hurt.
As Shaw and and Juliet's relationship progressed, Lassiter and Shawn's relationship seemed to become more accepting of each other. Shawn never had anything against Lassiter, he just wanted to spite him and annoy him. Lassiter had just been too stubborn to accept Shawn's "psychicness".
When Lassiter got married it was the happiest he had been in years. He returned to work the next day. "Typical Lassie" as Shawn would say. He noticed how distant Shawn and Juliet were acting and how Shawn was less theatrical than usual. He would just point clues out. He seemed to almost stop pretending he was psychic.
This continued and Lassiter became suspicious. He watched Shawn carefully. He saw how somber he was around Juliet now and made a connection.
Juliet had figured it out.
She knew Shawn was a fake.
Lassiter had mixed feelings on this revelation. He was happy that Juliet finally knew he was a fake. But he was sad their relationship would probably fall because of this. But most of all he was angry. Angry that Shawn had hurt Juliet. He wouldn't follow through on his threat though. That would hurt Juliet even more. He just acted like he knew nothing.
Time passed and it seemed Shawn and Juliet would not be getting back together. Lassiter let it go but Juliet was still very upset and it hurt Lassiter to see her hurting.
When they finally got back together Lassiter was happy for them but he promised himself if Shawn hurt her again he would follow through with his threat.
But Shawn never did.
Juliet left for San Francisco the day after Lassiter became Chief of Police. Shawn stayed behind to get his things in order.
Not for long though.
Months after Shawn and Gus had left Santa Barbara Lassiter got an invitation from Shawn and Juliet. An invitation to the wedding of Juliet O'Hara and Shawn Spencer.
Shawn Spencer, Fake Psychic of the Santa Barbara Police Department, has finally grown up.