Tlolane was set to join United on a three-year contract as a free agent after it was alleged that his contract with Rise and Shine was set to expire at the end of this month.
Reports circulating in the media suggest the deal is done, however, it has since emerged that the Limpopo-born striker still has another year left on his contract with City.
Chippa are now preparing to open a lawsuit against the agent after the club had already paid the agent-fees to facilitate Tlolane's move to the Port Elizabeth-based outfit.
"The player is still contracted to Polokwane City until June next year," confirmed a source close to the matter. "City have notified Chippa about the player's contract.
"It has emerged that Chippa [Mpengesi] was presented with a fake contract and paid the agent-fees to the agent. They have been robbed money and now they are opening a case of fraud against the agent."