A ferocious debate has erupted within the CIA and FBI over the scope of China’s penetration of the American intelligence community in the wake of last week’s arrest of a Chinese-American former CIA case officer accused of spying for Beijing.

The charging of Jerry Chun Shing Lee, 53, in federal court last week with possessing personal notebooks full of CIA asset names and phone numbers was hailed by many as a huge U.S. counterintelligence success against China.

But high-level intelligence sources say media coverage of the case has been rife with unverified speculation about Mr. Lee and the extent of his role in a breach that might have betrayed as many as 20 clandestine CIA informants in China back in 2010 and 2011. The informants were imprisoned and in some cases executed.

Two sources who spoke with The Washington Times cast doubt on the whole narrative about the reported crackdown, as well as the extent of Mr. Lee’s involvement, suggesting instead that Chinese disinformation — and penetration into America’s spy agencies — may have played a role that is still not fully appreciated.

“It would be a pity to scapegoat Jerry Lee and say, ‘Look, there was a big mole and we caught him and now the Chinese espionage problem is solved,’” said one of the sources, a former official with extensive intelligence experience in East Asia. “Some people are trying to do that with this case, which I think is dangerous.”

A second source with 20 years of counterintelligence experience said there was a “heated debate within the intelligence community over the extent of Chinese penetration and whether there are other moles,” and whether Jerry Lee was the major one.

The Chinese state-owned Global Times newspaper fed into the mystery of the case, calling Mr. Lee’s arrest a witch hunt with grave and unjust consequences for other Americans of Chinese descent.

“The U.S. seems to be mobilizing a mass movement to chase down Chinese ‘spies’ and ‘penetrators,’” the online news source said in an editorial last week. “If this continues, many Chinese will be wronged and the whole Chinese community will come under much pressure, tangible or not. This will undermine their human rights.”

Uncertainty and secrecy over the Lee affair builds on a legacy of mistrust that reaches back generations.

U.S. officials have engaged in an unknown number of China-related counterintelligence investigations during the years since the notorious case of Larry Wu-Tai Chin, a Chinese translator who sold classified documents to Beijing while working for the CIA for nearly 35 years from about 1950 through the mid-1980s. Chin was convicted in 1986 but killed himself before sentencing.

“The thing people need to remember is that the CIA and the FBI are and have been the No. 1 targets for the Chinese for a long time,” according to one of the sources, who said both agencies believe one of Beijing’s central goals is to “penetrate us so they can get the information needed to schwack their own guys who are working with us inside China.”

Ill-equipped to counter China?

U.S. authorities arrested after Mr. Lee after he arrived at John F. Kennedy International Airport in New York on Jan. 15. A naturalized U.S. citizen who worked as a CIA case officer from 1994 to 2007, Mr. Lee is also known by his Chinese name, Zhen Cheng Li.

At the time of his arrest, Mr. Lee had been living in Hong Kong and for the past 20 months was a security specialist employed by the global auction house Christie’s.

He was charged Tuesday in federal court in Virginia with violating the Espionage Act — the culmination of an FBI-led counterintelligence investigation that sources say began more than five years ago when the bureau discovered two small notebooks belonging to Mr. Lee that contained classified information.

Court documents say the books were found in August 2012 when FBI counterspies carried out a covert search of a Honolulu hotel room where Mr. Lee was staying. An FBI affidavit specifically claims the books contained the “true names and phone numbers of assets and covert CIA employees, as well as the addresses of CIA facilities.”

Mr. Lee faces a 10-year prison term if convicted, but some major questions remain unanswered.

For instance, the FBI affidavit makes no specific mention of China. It also offers no information about where the CIA employees, assets and facilities listed in Mr. Lee’s notebooks were located.

No reason was given why — if FBI counterintelligence found the notebooks in 2012 — it took more than five years for the agency to move on Mr. Lee. Was it because he was living in Hong Kong? Or was the agency simply sitting on the case in the hope that surveillance of Mr. Lee might lead to a bigger mole?

Some argue that U.S. intelligence agencies are simply ill-equipped to counter Chinese espionage methods.

“We don’t dedicate enough resources to counterintelligence against Chinese operations, influence operations, espionage against U.S. government secrets or economic espionage,” said Michael Pillsbury, a Mandarin-speaking analyst who has worked on China policy and intelligence issues for every U.S. administration since Richard Nixon.

“Whether it’s human intelligence or cyberactivity, we just don’t have anywhere near the resources necessary,” Mr. Pillsbury said in an interview, adding that Congress should require the White House to produce an annual report on the scope of Chinese spying so Capitol Hill can begin to address the lack of resources.

‘A lot of unknowns’

The CIA and FBI declined requests for comment on the Lee case. Other former high-level intelligence officials, both with CIA experience in China, were not willing to discuss its implications even on an off-the-record basis.

But the two other sources who did speak on background said the case has exposed how limited Washington’s grasp is of China’s potential penetration into the intelligence community.

“There are a lot of unknowns,” said one of the sources. “This stuff is very sensitive, and right now the veil of secrecy has been lifted a teeny, tiny bit.”

It’s still not known when Mr. Lee started working for Beijing or if his alleged espionage overlapped with his CIA tenure.

“If he actually started spying and giving Beijing intel back in the 2004-2006 time frame, when he was still at the agency, he would have had access to active data,” the source said. “The hunch is that this wasn’t the case — it’s that he started sharing intel after he left. The reason for this is that if he had been active back in 2006, he wouldn’t have left the agency the way he did. Beijing would have made it worth his while to stay.”

Another lingering question is why Mr. Lee would have kept such incriminating notebooks in his possession.

“It could be that he’s just a doofus who messed up,” one source said.

But it could also be that it took the FBI so long to pin a case on Mr. Lee because “he was so well-trained in countersurveillance techniques that his activity was not detected,” said the source. “A second possibility is he is not a spy for China but had some other reason for carrying classified data in his notebooks years after leaving CIA, where his 13 years’ experience could be the basis of appointment as a consultant to meet assets again.”

“Some are asking, ‘Why did it take so long for the FBI to charge him?’” said the source. “The better question is, ‘Why did it take so long for such a little charge?’ If they had all this other stuff on him, why isn’t there any mention of it?”

Mr. Lee has not been charged with spying for China, and so far the government has brought only a single charge of unlawful retention of national defense information.

FBI Special Agent Kelly O’Brien’s affidavit in the arrest states that the government is withholding its full knowledge of Mr. Lee’s activities. Ms. O’Brien stated outright in the document that her statements were “intended to show merely that there is sufficient probable cause for the requested criminal complaint and warrant.”

“It does not set forth all of my knowledge about this matter,” she wrote.

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