A former senior CIA official accused of stashing over $40million worth of gold bars from the federal government at his Virginia home allegedly devised a phony network of spies to hide the loot.

David J Rush is charged with fraudulently claiming tens of thousands of dollars in compensation for military leave after he was honorably discharged from the Navy in 2015. 

He was arrested last month after investigators searched his home and seized more than 300 gold bars, roughly $2million in US currency and about 35 luxury watches, according to an FBI agent's affidavit.

Rush allegedly created a 'special access program,' described to The Washington Post by people familiar with the probe as a black box to protect highly classified operations from even agents with the highest security clearances. 

He brought two colleagues in on the scheme, possibly without them knowing and swore them to secrecy, those sources said.

Rush allegedly used one of the agents to use a government contract that he made up himself to transfer millions to use for his own program.  

Two people familiar with the matter told the outlet that several CIA officials have been placed on leave pending an investigation, while a senior employee at a US defense contractor was fired. 

Many have wondered how Rush - whose job involved him working on the government's highest sensitivity programs - could have created such a program without getting clearance from his bosses. 

One official noted that to get to his position, Rush had to take blood tests, psych exams and even a polygraph before signing tons of forms and having multiple checks of his college transcripts.

Jim Himes, the ranking Democrat on the House Intelligence Committee, wondered: 'This is just staggering, keeping gold bars and wads of cash in your house is not exactly top-notch tradecraft. From an oversight standpoint, how the hell did this happen?' 

One source claimed that Rush put the program together as a failsafe to keep the federal government going in the event of a nuclear war or catastrophe.  

The logline on the program was used to convince a defense contractor with ties to Washington to buy the large amounts of gold. 

Rush was ordered to remain jailed until his trial after a hearing Friday where a defense attorney accused prosecutors of smearing the official with “sensational,” irrelevant allegations.

The defendant has both the means and motive to flee while the case against him is pending, US Magistrate Judge William Fitzpatrick ruled, citing Rush's professional experience.

'He's in a different position than most people to flee and avoid detection by law enforcement,' Fitzpatrick said.

Rush's attorney, Jessica Carmichael, noted that Rush isn't charged with any crimes related to the discovery of the gold bars, which she referred to as 'basically a non-issue' and 'nothing more than a sensational tidbit.' 

She said Rush properly obtained the gold bars and kept them locked in a safe in his basement.

'Mr. Rush never claimed they were his,' she said.

Between last November and March, Rush requested and received a 'significant quantity' of foreign currency and tens of millions of dollars in gold bars for 'work-related expenses,' according to the FBI affidavit. 

Justice Department prosecutor Gavin Tisdale said Rush wasn't supposed to have the gold bars at his home.

'That's the issue - his skirting of rules and regulations,' he said.

Tisdale briefly summarized the case against Rush in open court after a portion of the hearing was sealed from the public. The evidence against Rush 'grows stronger by the day,' Tisdale told the magistrate.

'Mr. Rush simply cannot be trusted to abide by this court's conditions,' he said.

Rush enlisted in the Navy in 1997 and was honorably discharged from the US Navy Reserves as a lieutenant in 2015, according to the affidavit.

Authorities claim Rush lied about his education and military background on job applications, falsely claiming to be a former Navy pilot who graduated with a bachelor's degree from Clemson University in South Carolina and a master's degree from Rensselaer Polytechnic Institute in New York.

Investigators determined that he didn't serve as a Navy pilot and didn't attend either school.

There is currently no evidence that Rush was working on behalf of a foreign country.

The FBI agent's affidavit claimed that rush joined the agency in 2009, long before current Director John Ratcliffe rose to the top. 

Friday's hearing was largely kept secret from the public as attorneys debated the high security clearance case.