I thought most of the nationwide restaurants make you “pool” tips and then spread the wealth at the end of the night. If I think the waiter/waitress is exceptional and might keep it - I leave a normal tip on the bill and slip them a little something on the way out.
I was always told this was done to spread tips to busboys and hosts - people who didn’t get tipped directly. It made sense to me at the time.
Some restaurant do this but this is just shared (pooled) tips among the wait staff. What Mario and other NYC owners were doing was saying the waiters, waitresses, bartenders had to give some percent of their tips to the cooks, the kitchen workers, the managers, the owners. So a waiter had to kick-back $$$ to Mario and the manager of that restaurant if he wanted to work at one of Mario's lucrative establishments. . All done in cash, undeclared cash I'll bet, and this is why Mario and company agreed to settle rather have the IRS making an example of them