Jurors acquitted HealthSouth Corp. founder Richard Scrushy on Tuesday of all charges in a surprise setback for federal prosecutors who had scored victories over a string of big-name CEOs accused of fraud.

The case against Scrushy, involving a $2.7 billion earnings overstatement at the rehabilitation and medical services chain he created and ran, had been widely considered among the strongest. He was the first CEO charged under the Sarbanes-Oxley corporate reporting law.