The owners of the Venetian Yacht Club and Crestwood Manor will pay up to $3.5 million to settle a lawsuit filed on behalf of waiters and other employees who charged that management illegally withheld tips, court papers show.

The class action suit covers more than 500 employees who worked at the Yacht Club, in Babylon Village, and Crestwood, in Northport, as well as Terrace on the Park, housed in the former 1964 World's Fair site in Flushing Meadows, Queens, as far back as 2006. Preliminary approval of the settlement was granted by a Nassau County Supreme Court judge on April 4, according to the court papers.

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The papers identify brothers George Makkos and Thomas Makkos as defendants in the suit. The brothers, who bought the Venetian Yacht Club -- then operating under a different name -- at a bankruptcy auction for $7.6 million in 2004, will pay into a settlement fund along with business partner Dimitrios Kaloidis. Under the settlement, the papers show, the defendants admitted no wrongdoing, and lawyers from both sides were prohibited from commenting on the case.

According to court papers filed by the employees' lawyers, Leeds Brown Law of Carle Place, management attached a 20 percent service charge to guest checks but withheld all or part of the money from employees.

The Babylon Beacon weekly newspaper first reported the terms of the settlement.

George Makkos lives in Southampton and Manhattan, according to a website for The Makkos Group, presiding over businesses that include both restaurants and high-profile concessions in New York City.

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In 2004, his Manhattan-based M&T Pretzel Inc., which operated pretzel carts in Central Park, agreed to pay $450,000 to settle charges by the state Attorney General that the company cheated vendors out of overtime, according to newspaper accounts. The company neither admitted nor denied guilt.