Exhibit 8 Declaration of Kexuan Yao

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DECLARATION OF KEXUAN YAO - 1

STANLEY C. MORRIS, ESQ. (BAR No. 183620)[email protected] T. CORRIGAN, ESQ. (BAR No. 143188)BCORRIGAN@ CORMORLLP.COM

CORRIGAN & MORRIS LLP201 SANTA MONICA BOULEVARD, SUITE 475SANTA MONICA, CALIFORNIA 90401-2212TELEPHONE: (310) 394-2800FACSIMILE: (310) 394-2825

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8Attorneys for PlaintiffKEXUANYAO

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Plaintiff,

DECLARATION OF KEXUAN YAOIN SUPPORT OF APPLICATION FORWRIT OF ATTACHMENT ANDTEMPORARY RESTRAININGORDER AND OTHER RELIEF

13 KEXUANYAO,

CORRIGA.." & MORRIS, LLPATTORNEYS AT LAw

201 SANTA MONICA BLVD.SUITE475

SANTA MONICA. CA. 90401(310) 394-2800

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Case No.:

vs.

CRISNIC FUND, S. A.;ANTHONY GENTILE;ED FURMAN;and Does 1-10,

Defendants.

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CORRIGAN & MORRIS, LLP ATTORNEYS AT LAW

201 SANTA MONICA BLVD. SUITE 475

SANTA MONICA, CA. 90401 (310) 394-2800


I, Kexuan Yao, declare as follows:

1. I am over eighteen years old. I have personal knowledge of the facts

stated herein and if called on would and could testify competently thereto.

2. I am the Chief Executive Officer of China Armco Metals, Inc.

(“China Armco”). China Armco is a publicly traded U.S. company that imports,

sells and distributes a variety of metal ore to the metal refinery industry and

recycles metal in China. China Armco’s common stock is quoted on the NYSE

Amex under the symbol "CNAM".

3. Although I speak and read English, I am not completely fluent in

English.

4. I own more than 5 million shares of China Armco stock, which is

greater than 34% of all the issued and outstanding shares of China Armco.

Attached hereto at Exhibit 1 is a true and correct copy of an excerpt from China

Armco’s May 17, 2010 periodic filing with the Securities and Exchange

Commission (“SEC”) documenting that China Armco had a total 14,355,532

shares issued and outstanding as of May 10, 2010.

5. My China Armco stock has not been registered with the United States

Securities and Exchange Commission (“SEC”).

6. Raymond Xia (“Xia”) is an employee of China Armco whom I often

ask to help me with certain tasks. Beginning in late May, I asked Xia to assist me

in obtaining a loan using my China Armco Stock as collateral. I have reviewed

Xia’s declaration submitted concurrently herewith having to do with my attempt to

obtain a stock loan and to the best of my knowledge, all of Xia’s attestations in his

declaration are true and correct.

7. On or about May 21, 2010, Xia showed me an email purportedly from

Ed Furman (“Furman”) with an attachment the described financial services

provided by Ayuda Funding Corp. (“Ayuda”), which included loans collateralized

by restricted stock, such as Yao’s. Attached hereto at Exhibit 2 is true and correct

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SANTA MONICA, CA. 90401 (310) 394-2800


copy of that May 21, 2010 email and attachment.

8. On June 7, 2010, I instructed Xia to write an email to Ed Furman

(“Furman”), a loan broker, to express my interest in borrowing money with my

China Armco shares posted as collateral. A true and correct copy of Xia’s email is

attached hereto at Exhibit 3.

9. On June 9, 2010, Xia handed me an email and proposed loan term

sheet purportedly from Furman on behalf of Furman’s client, Crisnic Fund. That

proposal was for a $2.8 million loan, for 5 years, at 3% simple interest, based on

my pledge of 1.3 million shares of my China Armco stock as collateral. On June 9,

2010, I approved and executed the term sheet. A true and correct copy of the email

its attachment are attached hereto at Exhibit 4.

10. On the morning of June 11, 2010, I reviewed an email purportedly

drafted by Ed Furman to Xia. That email stated, among other things: “As I also

mentioned earlier, his wire will be sent within 24 hours after confirmation from our

clearing firm that his collateral has been received.” A true and correct copy of that

email is attached hereto at Exhibit 5.

11. That same June 11, 2010 email from Furman also had attached a

document entitled: “Structured Transaction Agreement.” To the best of my

knowledge, Crisnic never signed the Structured Transaction Agreement. Attached

hereto at Exhibit 6 is a true and correct copy of the Structured Transaction

Agreement.

12. Later on in the day on June 11, 2010, Xia showed me an email that

purported to be between Furman and Anthony Gentile (“Gentile”) specifying the

location and account number for me to send my China Armco stock to Crisnic, via

electronic share transfer. Attached hereto at Exhibit 7 is a copy of that email.

13. On June 14, 2010, I asked Xia to send an email to Furman explaining

that I would need a legal opinion before I could transfer my shares to Crisnic

without restrictive legend. Attached hereto at Exhibit 8 is a copy of that email.

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14. In reliance on the proposed term sheet, I prepared, with the assistance

of Xia, a letter to Action Stock Transfer (“Action”), the stock transfer agent for

China Armco. That letter requests that the restrictive legend be removed from my

1.3 million shares of China Armco stock and requested that those shares be

electronically transferred to Crisnic’s brokerage account number 4121035. A true

and correct copy of that letter to the Action, dated June 15, 2010, is attached

hereto at Exhibit 9.

15. On June 21, 2010, I asked Xia to send Furman an email inquiring

about the legal opinion he had agreed to obtain ensuring the transaction complied

with the securities laws and enclosed an executed copy of the Structured Loan

Transaction Agreement. I asked Xia to attach attached copies of my stock

certificates with the words “RESTRICTED STOCK” printed in bold capitals

across the face. A true and correct copy of that email and the attachments are

attached hereto at Exhibit 10.

16. On June 22, 2010, Xia showed me an email that purported to be from

Furman and a legal engagement letter and from New York lawyer, Sunny Barkats

(“Barkats”). The email stated that Furman would be paying $4,500 for Barkats to

represent me and ensure the transaction was entirely legal. A true and correct copy

of that email and the attachment are attached hereto at Exhibit 11.

17. On June 23, 2010, Xia showed me a copy of the Structured Loan

Transaction document that expressly stated that it was between Crisnic and me. At

the signature block, however, Gentile executed the agreement only on behalf of

“IFG”, but not “Crisnic”, the party to the agreement. A true and correct copy of

that Agreement received on June 23, 2010 is attached hereto at Exhibit 12.

18. On June 23, 2010, I instructed Xia to transfer my 1.3 million shares

of stock to Crisnic anticipating that I would received the loan proceeds no later

than five business days later. Attached hereto at Exhibit 13 is a copy of the email

Xia sent to Furman and China Armco’s transfer agent at my direction.

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19. On June 25, 2010, Xia showed me a letter that I believed to be drafted

by my lawyer, Barkats. Xia told me that Barkats had requested that I sign the letter.

I quickly reviewed the letter, signed it, and instructed Xia to return it to Barkats. A

true and correct copy of that email and attached representation letter is attached

hereto at Exhibit 14.

20. On June 28, 2010, Xia showed me a copy of Barkats’ legal opinion to

Action that stated in his legal opinion it was legal to transfer my 1.3 million shares

of China Armco to Crisnic without any restrictive legends. Barkats opined that the

restrictive legends could be removed legally under SEC exemption from

registration Rule 144 (k). A true and correct copy of Barkats’ June 25, 2010 legal

opinion letter is attached hereto at Exhibit 15.

21. On June 28, 2010, Xia showed me an email from China Armco’s

transfer agent confirming that 1.3 million of my China Armco shares had been

electronically transferred to Crisnic’s brokerage account at Transcend Capital LP.

A true and correct copy of that email is attached hereto at Exhibit 16.

22. On June 29, 2010, I became aware that an unsual volume of China

Armco shares had traded on that day and the stock price had dropped precipitously.

I immediately became suspicious that Crisnic was selling my stock. However, at

that time, I was assured orally by both Gentile and Furman that the collateral

shares had never been sold and were held by Crisnc.

23. I recently reviewed Yahoo’s web site which showed that

approximately 2.2 million China Armco shares traded on June 29, 2010. According

to the Yahoo web site report, this represented a shocking increase in trading

volume for China Armco shares, which had a trading volume of only 168,000

shares the day before and its price had dropped from $3.75 to $3.25 during that

high volume trading day. Attached hereto at Exhibit 17 is a true and correct copy

of the historic stock price for China Armco from Yahoo web site.

24. On June 29, 2010, Xia showed me a document entitled Addendum A-

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SANTA MONICA, CA. 90401 (310) 394-2800


1 to the Structured Transaction Agreement. Thereafter, on June 30, 2010, I signed

the Addendum A-1 that specified I would receive approximately $2.5 million in

five (5) business days from receipt of collateral (June 28 2010). A copy the

executed Addendum A-1 is attached hereto at Exhibit 18.

25. On June 30, 2010, counsel for China Armco sent Crisnic’s broker,

Transcend, a letter advising that he believed Crisnic was selling China Armco

Stock in violation of the securities laws. Attached hereto at Exhibit 19 is a true

and correct copy of that letter.

26. On June 30, 2010, I instructed Xia to send an email to Furman

demanding payment of the $2.5 million in loan proceeds. Attached hereto at

Exhibit 20 is a true and correct copy of that email.

27. Attached hereto at Exhibit 21 is a true and correct copy of a DTC

report dated July 1, 2010. That DTC report shows that as of July 1, 2010, very

little, if any, of Yao’s stock appears to remain held by Crisnic at Transcend, which

clears its trades through Penson Financial.

28. On July 1, 2010, I reviewed an email from Furman that was

purportedly from Gentile stating the following:

Here is the e-mail from the fund. You

need to contact Yao and have him contact your

firm's attorney to send a Retraction letter

ASAP. Nothing will happen until this occurs.

My reputation with the firm is on the

line and they have work to do. Until the law

firm sends a retraction letter, an apology to

both me and the brokerage firm, and an

indemnification letter, I won’t be speaking

with them, or sending monies. Tell them to do

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SANTA MONICA, CA. 90401 (310) 394-2800


what I ask and then they’ll get their wire, until

then I don’t want to speak to anyone about

their deal.


29. On July 2, 2010, Gentile sent Xia, and others, an email stating the

following:

This letter is to inform you that Crisnic

Fund, S.A (CF) will not be sending anything to

anyone, nor will Penson Financial Services,

Inc. (PFSI). Until such time we are in

possession of indemnification letters for CF,

Transcend Capital, LLC (TC), Penson Financial

Services, Inc., (PFSI), and Anthony Gentile

personally. In addition both CF’s and TC’s

legal must be paid. We will also require letters

of apology to TC and CF from the law firm that

sent the letter. Until such time as we are in

possession of the above items, we will not

commit to a funding date.”


30. As of July 21, 2010, I had not received any of the $2.5 million loan

proceeds I had been promised would arrive no later than July 6, 2010.

31. On July 21, 2010, I authorized my counsel to issue a demand letter to

Crisnic. Five days later on July 26, 2010, Crisnic wired $1 million to my account,

which is 1.5 million less than I was entitled to receive as proceeds of the loan.

32. On July 26, 2010, I authorized my attorney to offer to rescind the

entire transaction with Crisnic and to return the $1 million partial payment.

Crisnic has refused all offers to rescind the transaction.

CoalUCAN" MOUlS, LLPAnORNE'S AT Lt.w

201 SANlAMOOICAB'VD.SUIT{ 475

SANTA MONICA. CA. 90401(310) 394-2800

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I declare under penalty of perjury under the laws of the United States that

2 the foregoing is true and correct. Executed this _ day of August 2010 at San

3 Mateo, California.

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Kexuan Yao

Exhibit 8 Declaration of Kexuan Yao

Documents

Transcript of Exhibit 8 Declaration of Kexuan Yao