This can be done during the bank robbery when playing in co-op as Lynch. Whilst Kane is getting to the vault Lynch stays in the main foyer looking over the civilians, during this time the screen blurs slightly, Lynch has a 'lapse' and hallucinates that the civilians in the bank are police officers (some wearing funny masks I think). Kill all the civilians in the area to obtain the achievement.
Thanks to Reabo for making this handy video solution: