* Paula Broadwell's Charlotte house searched Monday
* Developments could quash hopes for early end to case
* Former CIA chief agrees to testify to Congress on Benghazi
By Mark Hosenball
WASHINGTON, Nov 14 A computer used by Paula Broadwell, the woman whose affair with CIA director General David Petraeus led to his resignation, contained substantial classified information that should have been stored under more secure conditions, law enforcement and national security officials said on Wednesday.
The contents of the classified material and how Broadwell acquired it remain under investigation, said the officials. They spoke on condition of anonymity because they are not authorized to comment publicly.
But the quantity of classified material found on the computer was significant enough to warrant a continuing investigation, the officials told Reuters.
President Barack Obama told a news conference on Wednesday that there was no indication so far that any classified documents had been disclosed as a result of the scandal but said he will not prejudge the investigation results.
As a reserve officer in military intelligence, Broadwell - co-author of a biography on Petraeus - had security clearances that gave her access to classified material, several officials said. However, government rules require classified material to be stored in secure locations or computers.
Two officials familiar with the case said that one question investigators are asking was whether Broadwell followed government rules for handling classified information.
Late Monday, FBI investigators searched Broadwell's residence in Charlotte, North Carolina, an action that officials said occurred with Broadwell's consent.
Attempts to reach Broadwell, who has remained mainly out of the public eye, have been unsuccessful. She was seen late Tuesday at her brother's home in Washington, D.C.
It is unclear where or how Broadwell acquired the classified information. During the FBI investigation that led to the discovery of the affair between Petraeus and Broadwell, both individuals denied that Petraeus had supplied her with any classified information and the FBI accepted those explanations, law enforcement sources have said.
CRIMINAL CHARGES UNLIKELY
Law enforcement officials also have said that they believe the continuing FBI probe into the matter is likely to end without criminal charges. If Broadwell is found to have mishandled classified information, she could face action under administrative security regulations.
Still, the latest developments could quash hopes among some at the Justice Department and in Congress for a quick end to a scandal that this week also ensnared the commander of U.S. and NATO forces in Afghanistan, Marine General John Allen.
Petraeus has made no public statement since he announced his resignation as CIA chief on Friday.
The retired four-star Army general has agreed, however, to testify to Congress about the attack on the U.S. consulate in Benghazi, Libya, that killed four Americans, amid questions over the CIA's actions before, during and after the assault on Sept. 11, 2012.
Senate Intelligence Committee Chairman Dianne Feinstein said Petraeus was willing to testify about the Benghazi attack but the timing had not yet been decided, a spokesman for the California Democrat said.
Meanwhile, U.S. lawmakers also are demanding to know more about the timeline of the FBI's probe into Petraeus' affair with Broadwell.
Representative Lamar Smith, the Texas Republican who heads the House Judiciary Committee, wrote FBI Director Robert Mueller asking for both a timeline and whether Petraeus is the focus of a criminal probe.
"Has the FBI concluded that General Petraeus is not the subject of any criminal or intelligence-related investigation?" Smith asked in the letter.
Earlier on Wednesday, U.S. Defense Secretary Leon Panetta, speaking in Perth, Australia, warned against jumping to conclusions over the actions of Allen, a day after placing him under investigation in connection with the Petraeus scandal.
Allen, who denies any wrongdoing, is being investigated for potentially inappropriate communications with Jill Kelley, a Florida socialite who is at the center of the Petraeus case.
Panetta defended his decision to refer the case to the Pentagon's inspector general and for suspending Allen's nomination to another top position in the U.S. military, saying it was a prudent step "until we determine what the facts are."
PRAISE FOR ALLEN IN AFGHANISTAN
At the same time, he praised Allen's work commanding the Afghan war effort, a position he retains despite the probe.
"No one should leap to any conclusions here. General Allen is doing an excellent job at ISAF, in leading those forces," Panetta said, referring to the NATO-led force in Afghanistan.
"He certainly has my continued confidence to lead our forces and continue the fight."
Defense officials and people close to Petraeus say neither he nor Allen had a romantic relationship with Kelley, a 37-year-old wife and mother who is described as a prominent presence in military circles in Tampa.
She may have been seen as a rival by Broadwell, who sent Kelley a series of anonymous, harassing emails which touched off an investigation that uncovered evidence of an affair between Petraeus and Broadwell, according to a law enforcement source.
FBI investigators decided to pursue the matter when they found the messages contained information about the CIA chief's activities that was not publicly available, law enforcement officials said.
Kelley had gotten to know both Petraeus and Allen as a volunteer setting up social events at MacDill Air Force Base outside Tampa, headquarters of U.S. Central Command.
Allen and Kelley communicated often enough over the past two years to produce between 20,000 and 30,000 pages of email and other messages, which were turned over to Defense Department investigators on Sunday.
The actual volume of communications is likely much smaller, an official said, as the printouts include messages involving other people and email threads including prior communications.
A senior defense official told Reuters the messages were seen as inappropriate because they were "flirtatious" in nature, not because they dealt with sensitive information.
But another U.S. official said the Pentagon only decided to refer the matter for investigation after an initial look found the communications to be of "a sufficient character" to warrant further review.