A company once touted as one of the main financial backers of Utah’s first nuclear power plant is in big trouble with federal securities regulators.

The U.S. Securities and Exchange Commission has accused LeadDog Capital and its principals of scamming investors. LeadDog was named as the source of $30 million in financing for Blue Castle Holding’s proposed 3,000-megawatt nuclear power plant near the Green River.

Blue Castle CEO Aaron Tilton said his company had an agreement with the New York-based hedge fund for the working capital but he never pulled the trigger on the deal and no longer has dealings with LeadDog.

Still, the claimed $30 million in backing by LeadDog played a significant role in the state’s controversial decision last week to grant rights to Blue Castle for 53,600 acre-feet of water from the Green River, water the nuclear power plant must have to operate its two planned reactors. The decision is expected to be the only official say the state has over the project, which must win approval of the U.S. Nuclear Regulatory Commission.

State Engineer Kent Jones certified among other things in his Jan. 20 decision that the company “has the financial ability to complete the proposed” project.

Jones said Thursday he was unaware of the SEC cease-and-desist action against LeadDog, but said he may have signed off on the application anyway.

“It would be my guess [Blue Castle] would have explained, ‘We will go to somebody else to get money lined up,’ and that probably would have been reasonable enough for us,” Jones said.

“It was just a plan presented by them, and we didn’t do a lot of investigation into the plan, about the validity of the plan,” he added. “But it was their explanation for what they were going to do to obtain funds. Whether they had it in pocket or not, that was their explanation, and that explanation appeared to be a reasonable business practice.”

In its cease-and-desist petition against LeadDog filed on Nov. 15, the SEC accuses the “purported hedge fund” and co-owners Chris Messalas and Joseph LaRocco of raising money from investors without disclosing the company’s true financial position and conflicts of interest.

In July 2010, the company claimed $4.25 million in assets under management, the SEC filing alleged, while eight of the primarily penny-stock companies LeadDog had invested in were illiquid, and most were reporting losses of between $70,000 and $4 million.

That was a month after Blue Castle issued a news release touting the $30 million in private equity funding from LeadDog.

The SEC had no comment beyond its filing, and a phone message left at LeadDog’s Wall Street office was not returned.

Tilton said Thursday he was unaware of LeadDog’s problems but added that he never executed the financing agreement. “I guess it’s a good thing that we didn’t do business with them,” he said. Meanwhile, he stressed that the project has plenty of funding from other sources, including its Willow Creek LLC, a pipeline subsidiary.

He didn’t inform the state engineer that the LeadDog agreement never was completed, he said, insisting it would have been illegal for him to disclose to anyone — including the state — details about Blue Castle’s funding arrangements. “We had many sources of revenue — some that came through and some that didn’t.”

Tilton said all Blue Castle was required to do was give the state a “reason to believe” that the company could finance the project, which is expected to cost around $100 million to license and as much as $18 billion to build.

Utah law spells out the state engineer’s criteria for granting a water-rights change application. Most considerations have to do with the availability of water and the beneficial use of the water — a resource considered as valuable as gold in the West. But there also are financial considerations.