Robert Levinson went missing during a business trip to the Iranian island of Kish in March 2007.
US government officials have repeatedly called on Iran to help locate him.
“We have no comment on any purported affiliation between Mr. Levinson and the US government,” said a CIA statement.
“The US government remains committed to bringing him home safely to his family,” added CIA media spokesperson Todd Ebitz.
The Associated Press report alleges that the CIA paid off Robert Levinson’s family and reprimanded several analysts involved.
The media outlet writes that Robert Levinson was in Iran on an unapproved intelligence-gathering mission that, when revealed, caused a serious internal CIA scandal.
The CIA reportedly paid Robert Levinson’s family $2.5 million to avoid a public lawsuit, and also disciplined 10 veteran analysts.
The team of analysts is said to have paid Robert Levinson to gather intelligence prior to his disappearance.
Three of the CIA analysts – who reportedly had no authority to run spy operations – were allegedly later forced out of the agency.
The Associated Press investigation reportedly included interviews with top US and foreign officials and access to confidential documentation.
The media outlet alleges it was asked by the US government three times since 2010 to withhold information related to Robert Levinson’s CIA ties.
The news agency said it decided to run the report after all efforts to return Robert Levinson to the US were seen to have failed.
“The US government strongly urged the AP not to run this story out of concern for Mr. Levinson’s life,” said National Security Council spokesperson Caitlin Hayden.
“We regret that the AP would choose to run a story that does nothing to further the cause of bringing him home.”
There is no confirmation of who captured the former FBI agent or where he may be held, but US officials asked for Iran’s assistance in finding him just days after Iran and Western powers signed an interim agreement aimed at curbing Iran’s nuclear programme in late November.
“We reiterate the commitment of the United States Government to locate Mr. Levinson and bring him home safely to his family, friends, and loved ones,” White House spokesman Jay Carney wrote in a statement at the time.
“We respectfully ask the government of the Islamic Republic of Iran to assist us in securing Mr. Levinson’s health, welfare, and safe return.”
In August, Secretary of State John Kerry also asked for Iran’s assistance in freeing Robert Levinson and two other US citizens held in Iran, a former marine and a Christian pastor.
Robert Levinson, 64 when he went missing, was initially believed to have been investigating cigarette counterfeiting as a private detective when he disappeared.
His family received images of Robert Levinson in April 2011, showing him wearing a long grey beard, in an orange jumpsuit, holding up five signs that read:
The family was also sent a video in November 2010, which it released in December 2011 to try to aid the investigation.
In the 54-second clip, Robert Levinson pleads: “Help me get home.”
Although he has appeared in images and videos as a captive, Iran has said it does not know where he is and that there is no evidence he is in the country.
Investigators traced the phone used to send the photographs to Afghanistan, but the owner was not involved. The video was sent from a Pakistan internet cafe.
The FBI offered a $1 million reward in March 2012 for information leading to Robert Levinson’s safe return.
However, the US government has not received any sign Robert Levinson is alive in nearly three years, the Associated Press reports.
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