Despite his misgivings about Fredo, Michael allowed Fredo to attend the meeting with Moe Green in which Michael tells Moe to come up with a price for his hotel. In a foreshadowing of his later betrayal, Fredo takes sides against the family by asking Tom to get involved and make a different deal. Michael stenly warns him to never take sides against the family again....ever.

At that moment if not sooner Fredo had to know he had been "passed over" and that Michael was now in charge of the family business, and by his boneheaded move he should have raised Michael's and Tom's antennae also, and I can only guess what they were not keepiong a closer eye on him when he went galavanting off to Cuba with Johnny Ola and Hymand Roth, and having secret meetings with Ola in Beverly Hills.

Certainly none of these actions show a man who has a "good heart."