It is a story that flummoxed investigators – how a highly paid climate-change expert at the Environmental Protection Agency managed to defraud the government of nearly $1m, by pretending for a decade to be an undercover CIA agent.

John Beale, 65, is to undergo sentencing in a DC federal court on Wednesday, after pleading guilty to defrauding the government of $900,000 in salary and other benefits. Beale, who used his ruse to disappear for months at a time, has agreed to pay some $1.3m in restitution. He faces up to three years in jail.

The scandal could rebound against the current administrator of the EPA, Gina McCarthy, and her efforts to carry out President Barack Obama's climate-change agenda. Last week, an official investigation found that she knew of the fraud for more than a year. Other officials who worked with Beale at the agency are under investigation and in a report last week, the EPA inspector general said senior agency officials had “enabled” Beale by failing to challenge any of his stories or expense claims amounting to hundreds of thousands of dollars a year.

Beale, who retired last April after learning he was under investigation, earned salary and bonuses of $206,000 a year, far more than his supervisors. His fraud consisted largely of failing to turn up for work – in one instance for 18 months – and offering excuses connected to his fake intelligence role at the CIA.

He faked malaria, and a rescue mission on behalf of a CIA colleague who was being tortured by the Taliban. He billed the government $57,000 for five trips to California – which he used to see his parents – and for lavish trips to London. But the CIA has no record of Beale ever walking in the door, let alone earning a security clearance, and the climate expert was actually using his absences to go for long rides on his mountain bike or catch up on reading.

Patrick Sullivan, the EPA assistant inspector general who carried out the investigation, told NBC: “I thought: ‘Oh my God, How could this possibly have happened in this agency?” He added: “I’ve worked for the government for 35 years. I’ve never seen a situation like this.”

The deception only came to light after Beale held a very lavish retirement party aboard a yacht on the Potomac River, but kept drawing his salary for another year. McCarthy and other officials attended his send-off. She later initiated the review of Beale's activities.

Beale, who worked on landmark legislation of the Clean Air Act, remains well-connected in Washington, and a number of former colleagues were reluctant to comment on his case.

Sullivan told NBC he doubted such a fraud could occur anywhere other than the EPA. “There’s a certain culture here at the EPA where the mission is the most important thing,” he said. “They don’t think like criminal investigators. They tend to be very trusting and accepting.”

The EPA on Monday denounced Beale, and said McCarthy had uncovered the fraud when she headed the agency's office of air and radiation. A spokeswoman also said that the EPA had put additional safeguards in place to protect against fraud and abuse.

“John Beale is a convicted felon who went to great lengths to deceive and defraud the US government over the span of more than a decade,” the spokeswoman said. She added that Beale had begun his deception when George HW Bush was president, and that McCarthy was the first official to challenge his claims.

“Every subsequent senior manager of that office was told that Mr Beale was in fact working for the CIA, a narrative that was not questioned until November 2012,” the spokeswoman said. “After those questions were brought forward by Administrator McCarthy, and once the EPA was not able to confirm any relationship between Mr Beale and the CIA, the Agency promptly referred this matter to our Office of Inspector General.”

The great deception could well complicate McCarthy's efforts to carry out Obama's ambitious climate-change agenda. Republicans in Congress delayed McCarthy's confirmation for weeks, and conservative and industry groups are challenging the EPA's moves to cut greenhouse gas emissions for power plants, which would be the signature environmental achievement of the Obama administration.

Republicans in Congress – who have introduced multiple bills aimed at stripping the EPA of its authority to act on climate change – are demanding further investigations and hearings into what they called “egregious fraud”.

Darrell Issa, who heads the House oversight and investigations committee, said on Monday McCarthy's handling of Beale's fraud raised doubts about her capability as an administrator.

“EPA senior leadership, including the current administrator, was warned that Beale was stealing money from the American taxpayer. We now know that all three senior officials directly supervised by Gina McCarthy in her previous role with the EPA have been implicated in this egregious fraud,” Issa said in a statement. “This raises serious questions about her capabilities as a manager and leader, which the committee will investigate along other systemic problems at the EPA.”

David Vitter, the top Republican on the Senate environment and public works committee, has also demanded an investigation. However, he stopped short of questioning McCarthy's leadership.

“It’s very apparent that there were significant failings within the EPA because fraud to this extreme isn’t by pure accident. These reports begin to shed light on something perhaps far larger than even the initial investigations indicated,” Vitter said in a statement.

Barbara Boxer, the California Democrat who heads the Senate environment committee, has not committed to new hearings on how McCarthy and other officials handled Beale's case. But the subject was expected to come up in other committee business on Tuesday.