Carlos is found wandering in the Platinum Strip. As Chuck is talking with his rival Leon, Carlos waves them down, shouting for help. Leon revs up his bike and heads toward him, slicing him in half. His crazed rationale is that humans are worth "more points" than zombies as they "move around too much". It is impossible to save Carlos as he is killed during the cutscene at the beginning of this mission.
His notebook entry shows him wearing sunglasses, though he is not seen wearing any in the cutscene. However, if spawned he wears sunglasses.
In a mod, when spawning Carlos, instead of standing inert and idle like all other survivors and psychopaths, Carlos will actively run after Chuck and attempt to beat and kill him, regardless of where he is located and thus making him indeed loco as is stated in the notebook. 
Carlos shares some similarities with Sid as both are killed by people in vechiles and neither of their bodies spawn where they are killed.