According to the certificated flight instructor (CFI), the helicopter-rated passengers were friends of the helicopter owner. The owner agreed to let both passengers pilot his helicopter with the CFI. After the first flight around the airport pattern, the front passenger exchanged seats with the rear passenger, who moved into the right front seat next to the CFI. The CFI then instructed the pilot to bring the helicopter to a hover. The pilot lifted the helicopter to a hover, and it began to rotate to the left. The CFI instructed the pilot to "add right pedal, add right pedal", but the helicopter continued to rotate to the left. The CFI attempted to apply pressure on the right pedal, but the pilot "panicked and froze" on the flight controls. The CFI stated that he yelled to the pilot, "I have the controls", but the pilot did not respond. The CFI stated that he was unable to overcome the pilot's strength on the flight controls. The helicopter's tail rotor struck the ground, and the helicopter rolled over on its right side. The pilot and CFI did not report any mechanical or flight control anomalies with the helicopter. Examination of the helicopter revealed the tail boom separated from the fuselage and main rotor blades were destroyed.