Green’s Dictionary of Slang

to shoot a person in the knee or leg as a form of punishment.

1978		N.Y. Post 6 July 17: Another Italian exec is ‘capped.’ [HDAS].
1985		E. Leonard Glitz 61: They said he got capped by a junkie.
1990		J. Wambaugh Golden Orange (1991) 107: You want us to cap him and dump him in the bay?
1997		C. Hiaasen Lucky You 150: Shoot a Jew, cap a Jap —.
2013		T. Robinson Hard Bounce [ebook] ‘[H]ow do you know it wasn’t a cop who capped you in the first place?’.