A fan embraces Joe, the villain! (5)
I believe the answer is:
fagin
'villain' is the definition.
(I have seen 'Dickensian villain' mean 'fagin' so perhaps 'villain' could also mean 'fagin')
'a fan embraces joe' is the wordplay.
'embraces' is an insertion indicator.
'joe' becomes 'GI' (GI Joe).
'fan' placed around 'gi' is 'FAGIN'.
'the' is the link.
(Other definitions for fagin that I've seen before include "Dickens villain" , "Dickens' thief/receiver" , "Organiser of dips" , "Gang-leader" , "he hanged" .)