The flight instructor was conducting a training flight with the private pilot in the multiengine airplane. The flight instructor said that shortly after the airplane began to accelerate down the runway, she pulled the left throttle to idle to simulate an engine failure on takeoff and the private pilot "froze." She told him to bring the engine power to idle and brake, which he did, but the airplane was already veering left. The flight instructor then took control of the airplane and shut off power to each engine, but the airplane exited the runway and impacted an embankment resulting in substantial damage to the fuselage. The private pilot said that he responded to the simulated engine failure by removing thrust on both engines, applying the brakes, and trying to maintain directional control; however, "Despite the measures taken, the plane skidded off the runway." The flight instructor reported that there were no preimpact mechanical malfunctions or failures with the airplane that would have precluded normal operation.