A federal grand jury in Virginia has indicted former CIA operations officer Jerry Chun Shing Lee for conspiracy to spy for China, in a case that has been under investigation for more than six years.

Federal officials say the case represents one of the most damaging spy cases in the CIA’s checkered history of losing recruited agents to foreign spy services.

Mr. Lee is believed by American intelligence and law enforcement officials to be the cause of the agency losing a large number of its recruited agents in China around 2010. The agency and FBI spent the next eight years trying to find out the source of the losses.

The rolling up of the CIA’s informant network in China follows similar losses of most recruited CIA agents in the Soviet Union and Russia as the result of spying by CIA turncoat Aldrich Ames and the FBI spy for the Russians, former Special Agent Robert Hanssen, during the 1980s and 1990s.

In addition to the compromise of Soviet and Russian agents, the CIA also lost agents in Eastern Europe during the Cold War and later in Cuba as the result of foreign spy penetrations.

In the Lee case, the indictment revealed that FBI agents traced two notebooks to Mr. Lee that contained handwritten notes with classified information “including, but not limited to, true names and phone numbers of assets and covert CIA employees, operational notes from asset meetings, operational meeting locations and locations of covert facilities.”

Mr. Lee was charged with conspiracy to commit espionage and illegally retaining classified documents. If convicted, he faces life in prison.

According to the indictment, Mr. Lee lived in Hong Kong after retiring from CIA in 2007. In 2010, he was recruited by two Chinese Ministry of State Security (MSS) intelligence officers, who offered him cash in exchange for providing CIA secrets.

The indictment states the ex-CIA officer “had access to the identities of covert CIA officers; the identities of clandestine human sources; details of sensitive intelligence collection operations and methods; details of CIA clandestine training; and details of clandestine tradecraft the agency employs to avoid detection by hostile foreign intelligence services.”

The Chinese intelligence officers gave Mr. Lee $100,000 during their first meeting and then sent numerous “taskings” — intelligence collection orders — to him during the spy operation.

After the first meeting with the Chinese, Mr. Lee reported the spy pitch from the MSS, but kept secret the $100,000 cash payment.

Through 2013, Mr. Lee made “hundreds of thousands of dollars” in deposits in a Hong Kong bank the indictment suggests were payments for spying.

In addition to information on recruited agents, Mr. Lee provided the Chinese with details about CIA operations and facilities, according to the indictment.

Mr. Lee also tried to rejoin the CIA in 2012 and hid his travel to China in the prior two years from CIA interviewers. He also falsified his bank records to hide the MSS payments, according to the indictment.

U.S. counterintelligence agents conducted a search of Mr. Lee’s hotel room in Honolulu in August 2012 and discovered a notebook containing top-secret CIA information, including the names of “operational assets” — recruited CIA agents.

During an interview with FBI agents in January, the 53-year-old Mr. Lee denied keeping the notebook and other secret information found in the hotel room. The Justice Department announced the indictment Tuesday.

“Espionage is a serious crime that can expose our country to grave danger,” said FBI Assistant Director in Charge Nancy McNamara. “The FBI will continue to aggressively pursue all allegations of espionage.”

Said Assistant Attorney General John C. Demers: “Lee’s alleged actions betrayed the American people and his former colleagues at the CIA. We will not tolerate such threats to our country or its national security.”

Haspel on killing Americans

Gina Haspel, President Trump’s nominee to be the next CIA director, stated in written Senate testimony that American citizens remain targets of CIA drone strikes and other lethal operations.

Asked her views on the subject, the career operations officer made clear that all lethal strikes against Americans are coordinated with the attorney general.

“Although being a U.S. citizen does not immunize members of an enemy force from attack, a decision to use lethal force against a U.S. citizen is one of the most serious the U.S. government could face,” Ms. Haspel wrote ahead of her Senate Select Committee on Intelligence confirmation hearing.

“When deciding whether to use lethal force against a U.S. citizen, the U.S. government would need to take that person’s constitutional rights into account. The Department of Justice has set forth a detailed and authoritative framework for the constitutional analysis in public documents and speeches,” she added.

The first known American killed in a CIA drone strike was Anwar al-Awlaki, an English-speaking Islamic terrorist who was the inspiration for several high-profile terror attacks in the United States.

Al-Awlaki was killed in a CIA drone strike in Yemen on Sept. 30, 2011, when two Predator drones fired Hellfire missiles at a vehicle convoy the New Mexico-born cleric was riding in. He left behind English-language videotapes urging radical Islamists to carry out terrorist attacks.

His videos have been linked to Army Maj. Nidal Hasan who killed 13 people and injured more than 30 others in a 2009 shooting attack at Fort Hood, Texas. Al-Awlaki also was said to inspire terrorist Omar Mateen who carried out the Orlando nightclub shooting in June 2016 that killed 49 people.

And al-Awlaki also inspired Syed Rizwan Farook, one of two terrorists who killed 14 people during a shooting attack in San Bernardino, California, in December 2014.

Asked about Mr. Trump’s statement in 2015 that the United States should kill the families of terrorists in addition to terrorists themselves, Ms. Haspel said she was unaware in 30 years at CIA that a U.S. official had proposed or actually targeted terrorists’ family members.

“I can assure you that, if confirmed as director of the CIA, I would not condone any such activity by the U.S. government regardless of its legality under domestic and international law,” she said.

Mattis on Iran

Defense Secretary James N. Mattis told a Senate hearing Wednesday that Iran has continued destabilizing activities throughout the Middle East.

“They continue their malign activities across the region,” Mr. Mattis told the Senate Appropriations defense subcommittee.

Syrian President Bashar Assad “is still in power today, still murdering his own people and still creating refugee flows that we’ve not seen before based on the support out of Iran,” he said.

Without Tehran’s backing, the Assad regime would have been overthrown by the Syrian people, he added.

“At the same time, we see Iran’s activities from Yemen to Bahrain, Saudi Arabia, obviously, up into Lebanon and it continues apace,” Mr. Mattis said.

“We have not seen any drawdown or reduction in Iran’s malicious activities and malign activities across the region.”

Mr. Mattis said the United States jettisoned the Iran nuclear deal “because we found it was inadequate for the long-term effort.” The United States is working with allied to try and force Iran into “more responsible” international and regional behavior, he said.

The defense secretary noted that Iran presents five different threats, of which the most serious is its nuclear weapons program.

The others include support for terrorism, Iran’s ballistic missile development, cyber attacks and threats posed to international commerce in the Red Sea and Persian Gulf.

Mr. Mattis was testifying on the Pentagon’s $654.6 billion budget request for fiscal 2019.

The Pentagon under Mr. Mattis is seeking to restore military readiness that has slumped based on years of operations against terrorists and funding uncertainty.

New defense priorities including countering nation-states threat led by China, Russia, North Korea and Iran and downgrading the war on terrorism.

“Our military remains capable, but our competitive edge has eroded in every domain of warfare — air, land, sea, space and cyber,” Mr. Mattis testified.

• Contact Bill Gertz on Twitter @BillGertz.